(Bloomberg) -- Crypto broker Genesis told clients that it could take weeks, not days, for it to find a path forward for its troubled lending unit, which was hobbled by the implosion of Sam Bankman-Fried’s FTX.
“These are extraordinary times in our industry, and, while we are working urgently, this is a comprehensive process that we expect will take some time,” Derar Islim, Genesis’s interim CEO wrote in a letter seen by Bloomberg News. “We anticipate that it will take additional weeks rather than days for us to arrive at a path forward,” he said, adding that the company will update clients on timing as it makes progress. A Genesis spokesperson declined to comment.
The sudden collapse of FTX, one of the world’s largest crypto exchanges, roiled the digital-asset market and triggered a liquidity crunch at Genesis. The company has been trying to raise at least $1 billion in fresh cash for its lending unit, though some investors approached for the lifeline have balked at the interconnectedness between Genesis and other related entities that are part of Barry Silbert’s Digital Currency Group.
Read more: Genesis Balance Sheet Reveals Web of Loans Across Silbert Empire
Genesis, which warned potential investors that it may need to file for bankruptcy if its fundraising efforts fail, halted redemptions at the lending unit shortly after revealing on Nov. 10 that it had $175 million locked in an FTX trading account. Creditors to the embattled crypto brokerage — including the Winklevoss twins’ Gemini, whose yield product depended on Genesis as a key partner — have since organized with restructuring lawyers to coordinate efforts on options.
Islim said in the letter seen by Bloomberg that “all other Genesis entities remain fully operational” and that the company is continuing to support its clients for spot and derivatives trading and custody services.
“Working in consultation with highly experienced advisors and in close collaboration with our owner, DCG, we are evaluating the most effective path to preserve client assets, strengthen our liquidity, and ultimately move our business forward,” Islim said. “We are also engaged in productive discussions with representatives of several client groups that have recently coalesced.”
Genesis has $2.8 billion in outstanding loans on its balance sheet, with about 30% made to related parties including its parent company DCG, Bloomberg reported last month.
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