Genesis’ Interim CEO Derar Islim told clients that the company needs more time to deliver a solution for its borrowing and lending business.
In a letter to clients on Jan. 4, Islim said the firm was in the process of working with its parent company Digital Currency Group (DCG) and advisors on options to preserve client assets in its impacted lending business unit.
“While we are committed to moving as quickly as possible, this is a very complex process that will take some additional time,” he said.
Genesis’ lending arm halted withdrawals in November after the shocking collapse of crypto exchange FTX. The platform owes $900 million to users of Gemini Earn, a high-yield savings product operated by crypto exchange Gemini.
Genesis and DCG have been under pressure from Gemini’s upper management to resolve its ongoing liquidity issues. Gemini co-founder Cameron Winklevoss took aim at DCG CEO Barry Silbert earlier this week, accusing him of “bad faith stall tactics” in an open letter shared on Twitter.
“Every time we ask you for tangible engagement, you hide behind lawyers, investment bankers, and process,” said Winklevoss in the letter.
Winklevoss claims that Gemini’s creditor committee presented DCG and Genesis with resolution proposals on two occasions in December, but never heard back. Silbert claims that DCG and Genesis delivered its own proposal on Dec. 29 to which Gemini has not responded.
As the heads of these two major crypto companies hash it out on Twitter, market participants have grown weary as speculations around DCG’s potential insolvency surfaced.
According to Ram Ahluwalia, CEO of Lumida Wealth, DCG has made a number of costly mistakes over the past few months, including not accepting the creditor committee’s terms and borrowing from retail investors.
“And there is lack of transparency at DCG to known creditors around the $1.1 Bn loan. No new capital at DCG to fill the hole means DCG has good odds of going to Ch 11,” he tweeted.
Genesis letter: ‘Chat GPT: Help me write a letter without actually saying anything. Reference unrelated entities to the dispute at hand. Do not add clarity to the $1.1 Bn loan terms at all costs. End on a positive note.’
— Ram Ahluwalia, crypto CFA (@ramahluwalia) January 4, 2023