- World Street Journal reported that Genesis sought a $1 billion Emergency loan from investors.
- The loan request still needs to be granted.
- Genesis has suspended withdrawals for its customers.
Genesis, a crypto lender, became a platform affected by the FTX collapse. At a time when investors and exchange platforms are calculating their losses, the likes of Genesis are seeking a way out.
As the FTX collapse continues reverberating days after the bankruptcy announcement, experts say the crypto industry will suffer more.
So while it seems Genesis has identified the enormity of FTX collapse on its — the exchange is seeking emergency loans from investors to cushion the effect of the collapse.
Genesis Seeks $1 Billion Emergency Loan
According to the Wall Street Journal report, Genesis sought an emergency loan of $ 1 billion from investors. This loan request comes in the wake of FTX’s bankruptcy filing and eventual collapse. However, the loan request was not granted.
They allegedly sought the loan for a “ liquidity crunch due to certain illiquid assets on its balance sheet.” The document shows an ongoing run on deposits driven mainly by retail programs and partners of Genesis— and institutional clients testing liquidity.
Furthermore, a spokeswoman for Genesis responded to the loan request news. She confirmed that they had the intention of making the request. However, it was prepared over the weekend and is no longer current. Whether they made the loan request and investors turned it down is unknown.
Similarly, the spokeswoman said they have moved past the issue of loan requests. She said “the firm is having “very positive conversations” with potential investors to shore up its liquidity.
She added that “Genesis had been exploring all possible options amidst the liquidity crunch resulting from the FTX news” Experts opined that since the loan request didn’t work out, there are other options to keep the exchange afloat.
One such option is to suspend redemptions and new loan originations in the lending business.
In corroborating the news that it had suspended redemptions, the spokeswoman sighted the reasons for that move. She said, “We made the difficult decisions… So that we can identify the best solutions and outcomes possible for clients.”
Genesis Rolls Out Some More Options
It seems that Genesis is trying to keep the momentum and minimize the damage amidst the FTX collapse. As part of the efforts, Genesis tweeted that it has hired the best advisors to explore all possible options.
Furthermore, the Genesis lending unit has suspended customer withdrawal. Experts consider this as part of the options necessary to mitigate the effect of the FTX collapse.
Similarly, the institutional digital lender says they will identify the best solutions for lending business in the coming days. Genesis said it would probably consider sourcing new liquidity.