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HomeCryptocurrencyCrypto Lender Genesis Allegedly Owes $900M To Gemini Clients: Report

Crypto Lender Genesis Allegedly Owes $900M To Gemini Clients: Report

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

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

On November 16, Genesis announced that it had temporarily suspended withdrawals citing “unprecedented market turmoil, days after disclosing around $175 million in funds stuck in an FTX trading account. Genesis is reportedly facing difficulties raising money for its lending unit, but has refuted speculation of its “imminent” bankruptcy.

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

Gemini formed a committee of creditors and is working to recover funds from Genesis and DCG, the report states. In an effort to restore client confidence amid fears of a contagious spread following the FTX crash, Gemini announced on Nov. 29 its Trust Center, a dashboard that displays metrics for funds held by Gemini and in bag name.

However, in the Twitter thread about the Trust Center, customers of the Earn program stated that their trust would be restored once withdrawal earnings resumed.

Gemini’s Earn program launched in 2021 in the United States. As of November 2022, it operates in more than 65 countries, including new jurisdictions such as Croatia, Cyprus, the Czech Republic, Denmark, Hungary, Ireland, Latvia, Liechtenstein, Portugal, Romania, Slovenia, Sweden and others, the firm said. The exchange was affected by the ongoing crypto bear market, which has cut as much as 20% of its staff this year.

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