Creditors of crypto lender Genesis who have sought legal advice on the firms near-bankruptcy currently amount for approximately $1.8 billion in loans, which is expected to grow further.
Reports say a group of consumers who used cryptocurrency exchange Gemini’s Earn program, which is linked to Genesis, were due $900 million when Genesis’ loan unit froze user withdrawals in November. The group is represented by law firm Latham & Watkins.
Now, a second group of miscellaneous Genesis creditors, with debts totaling $900 million, is represented by legal firm Proskauer Rose, according to a second source.
The Proskauer group brings the total to $1.8 billion, with more to follow from a third ad hoc group represented by Kirkland & Ellis, the law firm defending bankrupt crypto businesses Celsius and Voyager Digital.
The crypto broker assured its investors that it was attempting to avoid bankruptcy after it was reported on Tuesday that the firm’s creditors were coordinating with restructuring lawyers to avert insolvency.
“Our goal is to resolve the current situation in the lending business without the need for any bankruptcy filing,” a Genesis spokesperson said.
The firm’s lending unit Genesis Global Capital froze redemptions and new loan originations as relayed by its Interim CEO Derar Islim to customers. The redemption halt is due to withdrawal requests exceeding the lender’s liquidity profile; Genesis also disclosed that its derivatives unit had around $175 million tied up and locked in an FTX trading account.
Gemini also previously revealed that Gemini Earn, a yield product offered to customers, functioned in partnership with Genesis’ lending arm. The company, however, affirmed that its customer funds are backed 1:1 and “available for withdrawal at any time.”
Information for this briefing was found via Coindesk and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.