Genesis said it will take additional weeks to carve out a recovery path for its lending business.
Crypto lending platform Genesis has informed its customers that its withdrawal freeze is likely to last “additional weeks” amid efforts to stave off a potential bankruptcy filing.
In a Dec. 7 letter to its customers shared by Genesis to Cointelegraph, interim CEO Derar Islim — who took the temporary helm of the company in August — said it will be weeks for them to formulate a recovery plan that could see withdrawals reopened, stating:
“At this point, we anticipate that it will take additional weeks rather than days for us to arrive at a path forward.”
The letter also stated that Genesis is “working in consultation with highly experienced advisors” and are “evaluating the most effective path to preserve client assets, strengthen our liquidity, and ultimately move our business forward.”
“All other Genesis entities remain fully operational,” the letter added.
Genesis Trading, the market maker and lending subsidiary of Digital Currency Group (DCG) first flagged exposure to FTX in a Nov. 10 Twitter thread, revealing that it had $175 million in funds locked on the FTX crypto exchange.
DCG attempted to bail out Genesis with a $140 million cash infusion that same day.
However, this didn’t appear to be enough to resolve its liquidity issues, as Genesis Global Capital froze withdrawals on Nov. 16 citing “unprecedented market turmoil” caused by the collapse of FTX, which led to “abnormal” levels of withdrawals that exceeded its liquidity.
On Nov. 21, the crypto lender denied plans to file for bankruptcy “imminently” after failing to cover a reported $1 billion shortfall in its balance sheet.
Shortly after on Nov. 22, Genesis confirmed that the firm hired investment bank Moelis & Co for restructuring services as a means to avoid the Chapter 11 route.
In the letter, Genesis reaffirmed that it is “committed to being as transparent as possible” to those affected and that customers will be informed of “meaningful developments, including any updates on timing.”