Genesis requested $1 billion emergency loan from investors before suspending withdrawals

Cryptocurrency lender Genesis was seeking a $1 billion emergency loan from investors before announcing to clients it was suspending withdrawals this week , reported the Wall Street Journal.

The newspaper claims to have seen physical evidence of a confidential document in which the company expresses the need for this money on the basis of "a cash dip due to certain illiquid assets in its balance sheet."< /p>

As we know, the funds never arrived.

"There is a run on deposits going on, driven primarily by retail programs and Genesis partners (i.e. Gemini Earn) and institutional clients testing liquidity," the document reads.

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"Genesis has explored all possible options amid the liquidity crunch resulting from the FTX news", a Genesis representative said.

"After considering a number of options, we have made the difficult decision to temporarily suspend repayments and new loans in the lending industry so that we can identify the best solution and the best possible result for customers."

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The fall of Three Arrows Capital, a crypto hedging firm that filed for bankruptcy, caused damage to Genesis earlier this year. According to court records, Genesis loaned Three Arrows $2.4 billion. Genesis' parent company, Digital Currency Group, has a $1.2 billion claim against the insolvent hedge fund.

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