Gemini used Genesis as its main lending partner for its high-yield Earn service, which lets users deposit their cryptocurrencies in exchange for interest, much like a bank account. Depending on the tokens deposited, the service offered yields between 0.45% and 8%. According to reports, Gemini is attempting to recover the money from Genesis and DCG as a member of a creditors’ committee.
Since the FTX outbreak started at the beginning of last month, there has been a significant interruption to the Gemini Earn service.
Gemini Earn stopped accepting withdrawals on November 16 and didn’t say when they’re likely to be resumed. The exchange cited “extraordinary market turbulence” as the reason for the shift.
Following the FTX collapse on the same day, Genesis immediately suspended customer redemption and new loan applications due to “abnormal withdrawal requests.”
According to some reports, Genesis is currently in discussion with investment bank Moelis & Co about potential financing options. Earlier this month, it was revealed that the lender made an effort to raise $1 billion in order to avoid the “liquidity crunch” that compelled it to stop withdrawals.
Genesis’ exposure to FTX, which came via its derivatives trading business, was at least $175 million.
Additionally, the already uncertain future for Gemini’s creditors may be complicated by the complicated financial ties between Gemini and its parent business.
At the time of writing, all other Gemini services, including its exchange, Gemini credit card, and Gemini Staking, are still fully operational and operating as usual.