It happened before they suspended withdrawals on the website. At the time, it had $2.8 billion in total active loans.
Cryptocurrency lender Genesis asked for an emergency loan of $1 billion from investors. It happened before suspending withdrawals on its website, the Wall Street Journal reported, citing a confidential fundraising document.
The document refers to a liquidity crisis due to certain illiquid assets on Genesis’s balance sheet. On Wednesday, the firm suspended customer repayments in its lending business. It was in the midst of the sudden crash of the FTX cryptocurrency exchange, led by Sam Bankman-Fried.
In an interim call, Derar Islim, CEO of Genesis Global Capital, confirmed the temporary closure of the cryptocurrency lending department, thus ceasing the possibility of withdrawing funds.
The department involved provides services to a broad base of institutional clients. It had $2.8 billion in total active loans as of the end of the third quarter of 2022, according to results posted on the company’s website.
The FTX implosion has wreaked havoc on the industry. There were difficulties in the liquidity of the companies exposed to what was one of the largest cryptocurrency exchanges in the world. The crisis has also led to investigations by regulators in several countries.
After Genesis Global Capital ceased withdrawals for exposure to FTX, Tether clarified that it has “absolutely no exposure to Genesis or Gemeni Earn.” It recalled that Tether tokens are 100% backed by its reserves and that the assets supporting them outweigh the liabilities.
Binance Does Not Reveal More Details
The world’s largest cryptocurrency exchange, Binance, revealed that it cannot share any further details or documentation about its trading with FTX, because they’re cooperating with regulatory authorities.
According to The Block, regulatory authorities are also questioning Binance about its actions in the face of the FTX crash. The UK recently announced that it would investigate the failed deal of both exchanges.
Binance would be collaborating with US regulators as it has been doing it with UK regulators, by providing all kinds of documents and details about the intent to purchase FTX prior to its bankruptcy.
The latest on FTX
According to Business Insider, John J. Ray, who was announced as the company’s new CEO on Friday, in a statement submitted as part of the FTX Chapter 11 bankruptcy filing and published today, claimed that “In the Bahamas, I understand that FTX Group corporate funds were used to purchase homes and other personal items for employees and consultants.”
Ray’s statement also asserts that FTX “did not have the type of payout controls that I believe are appropriate for a commercial enterprise.” In this regard, he noted that employees submitted payment requests through an online chat platform.
By Audy Castaneda