A letter from Genesis Interim CEO Derar Islim to customers on Wednesday suggested that the firm’s withdrawal freeze likely won’t be resolved for “weeks” to come.
- The letter, first viewed by CoinDesk, stated that Genesis is committed to being as “transparent as possible” with its customers throughout the process.
- The CEO also said that Genesis is in close consultation with experienced advisers and its owner, Digital Currency Group (DCG).
- Genesis froze withdrawals shortly after FTX filed for bankruptcy in November, during which its derivatives business lost $175 million inside the exchange.
- DCG delivered Genesis a $140 million cash infusion shortly afterward, but this wasn’t enough to resolve its liquidity issues. The lending business froze customer withdrawals on November 16th, after which it reportedly sought $1 billion in emergency funding.
- After failing to receive such funding, a report the following week suggested the company would go bankrupt without outside support. The firm has since onboarded restructuring lawyers to try and avoid that fate.
- Withdrawal freezes have historically signaled the imminent death of exchanges and lenders. Businesses including Celsius, Voyager, FTX, and BlockFi have all filed for bankruptcy this year shortly after taking similar action.
- The Genesis freeze has also impacted Gemini Earn, to which Genesis reportedly owes customers $900 million. However, users of other arms of Genesis, including its trading and custody services, have still not been impacted.