Media: Gemini withdrew $282 million before Genesis went bankrupt


The Gemini exchange withdrew $282 million from Genesis Global Capital several months before the crypto lending platform declared bankruptcy. Bloomberg writes about this, citing informed sources.

The firm of the Winklevoss brothers is trying to get $1.1 billion back through the court. Genesis incurred a debt to Gemini clients under the Earn program. It allowed exchange users to receive profitability on digital assets lent to the platform.

The mentioned $282 million became a reserve to ensure that customer requirements are met.

On November 16, 2022, Genesis Global Capital froze the withdrawal of funds and the issuance of new loans. The firm cited “increased demands” from clients following the collapse of FTX.

The source of difficulties was the collapse of a hedge fund 3AC in July of the same year. The latter did not fulfill his obligations to Genesis Global Capital for $2.36 billion. The company was supported by its parent DCG.

In January 2023, Genesis Global Holdco and its subsidiaries Genesis Asia Pacific and Genesis Global Capital filed for bankruptcy. According to media reports, their liabilities exceed $3 billion. This amount includes claims from clients of the Gemini exchange for $900 million.

In May, DCG, Genesis, the cryptolending platform’s creditors’ committee and Gemini agreed to launch a 30-day pre-trial conciliation process.

The parties sought to find an acceptable solution to the agreement proposed by Genesis with creditors in February 2023, according to which the latter would be able to return 80% of the lost funds. The agreements provided for the gradual zeroing out of the platform’s loan portfolio and the sale of insolvent structures.

In May, DCG missed paying $630 million in compensation to a bitcoin exchange.

In July, Gemini filed a lawsuit in which it immediately demanded the return of $1.1 billion for 232,000 affected Earn users. Digital Currency Group called for it to be rejected. This was preceded by an ultimatum from the Winklowoss brothers, who intend to seek compensation in the amount of $1.46 billion.

In August, DCG promised to reimburse Genesis creditors between 70% and 90% of the funds. However, the latter called the proposal “unsatisfactory” and threatened to block any final bankruptcy deal with similar conditions.

Recall that in September, Genesis sued DCG over unpaid loans worth $600 million.

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