The crypto broker Genesis told clients in a new update that it needs more time to come up with a solution for the troubles at its lending unit.
"While we are committed to moving as quickly as possible, this is a very complex process that will take some additional time. We believe we can arrive at a solution," interim CEO Derar Islim wrote in a letter seen by Bloomberg News. "We will continue to give you updates on meaningful developments, including any updates on timing."
The sudden collapse of FTX, one of the world's largest crypto exchanges, toward the end of 2022 roiled the digital-asset market and triggered a liquidity crunch at Genesis. The company has been trying to raise fresh cash for its lending unit, though some investors approached for the lifeline have balked at the interconnectedness between Genesis and other related entities that are part of Barry Silbert's Digital Currency Group, Bloomberg News reported recently.
Earlier this week, the digital-asset entrepreneur Cameron Winklevoss accused Silbert of "bad faith stall tactics" and the intermingling of funds within his conglomerate that Winklevoss says have left $900 million in customer assets needlessly in limbo since FTX's meltdown. Gemini Trust Co., founded by Winklevoss and his twin brother Tyler, paused redemptions on a lending product called Earn, which offered investors the potential to generate as much as 8% in interest on their digital coins. It did so by lending them out to Genesis Global Capital. Silbert denied the allegations.
Islim added in the letter that Genesis is continuing to work with its advisors, and in collaboration with Digital Currency Group and advisors appointed by various client groups, "to evaluate options to preserve client assets and move the business forward." He added, too, that Genesis has made progress in refining its business plans for its client offerings, including that it reduced costs and is driving efficiencies across its business lines.
Genesis's derivatives and spot-trading divisions are fully operational, Islim also said. Genesis suspended redemptions and new loan originations in November.
"As we start 2023, we continue to offer clients the white glove service that we always have in our trading business and appreciate our lending clients' patience as we make progress toward an equitable solution," Islim said in the letter.
— With assistance from Olga Kharif.
