Genesis Crypto Lender Owes $900M to Gemini Clients: Report

Crypto lender Genesis and its parent company Digital Currency Group (DCG) owe Gemini clients $900 million, according to a Financial Times report disclosed on December 3 citing people familiar with the matter.

The problem stems from the dramatic collapse of FTX in November. Crypto exchange Gemini operates a product called Gemini Earn in partnership with Genesis, offering investors the opportunity to earn 8% interest by lending their crypto, including Bitcoin and fiat-pegged stablecoins.

On November 16, Genesis announced that it had withdrawals temporarily suspended citing “unprecedented turmoil in the market, days after the disclosure approximately $175 million value of funds locked in an FTX trading account. Genesis reportedly struggles to raise funds for its loan unit, but refuted speculation about his ‘imminent’ bankruptcy.

Also on November 16, Gemini Earn began experiencing issues with deposits, according on the trade status page. The product remains unavailable at the time of writing, while all other Gemini services, including the exchange trading engine and the Gemini credit card remain available.

Gemini has formed a creditors’ committee and is working to recover the funds from Genesis and DCG, the report notes. In an effort to restore client confidence amid contagious spread fears after FTX’s fall, Gemini on November 29 announced its Trust Center, a dashboard showing metrics of funds held by Gemini and on behalf of the exchange. .

In the Trust Center Tweeter thread, however, Earn Program customers said they would regain their trust once withdrawal income resumes.

Gemini’s Win program was launched in 2021 in the United States. As of November 2022, it operates in over 65 countries, including new jurisdictions like Croatia, Cyprus, Czech Republic, Denmark, Hungary, Ireland, Latvia, Liechtenstein, Portugal, Romania, Slovenia, Sweden and others, the company said. The exchange was hit by the ongoing crypto bear market, cutting up to 20% of its workforce this year.

Gemini and Genesis did not immediately respond to requests for comment from Cointelegraphs.