Crypto lender Genesis claims liabilities of $5.1 billion in November

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Crypto lender Genesis declared a total of $5.1 billion in debt shortly after it blocked customers from making withdrawals from the platform in November, according to company bankruptcy filings.

Genesis Global Holdco LLC and two of its lending subsidiaries, which filed for bankruptcy protection Thursday in New York, are the latest crypto companies to implode as contagion from the collapse of asset exchange FTX digital spreads.

Genesis halted withdrawals shortly after FTX filed for bankruptcy in November. The lending company then said it was facing abnormal withdrawal requests that exceeded its liquidity.

Earlier this month, the Securities and Exchange Commission accused Genesis and its former lending partner Gemini Trust of selling unregistered securities. Some users of the Geminis Earn program, who lent their crypto through Genesis to earn interest, were unable to access their funds.

Read: Super lame, says Gemini co-founder Tyler Winklevoss about SEC charges

In a Friday filing with the Southern District of New York bankruptcy court, Genesis acting chief executive Derar Islim attributed the company’s liquidity crunch in part to a bank run, with the FTX implosion having shaken investor confidence.

Here’s a breakdown of what Genesis said:

He said creditors demanded repayment of $827 in loans in November, according to the bankruptcy filing. He said the company recorded a loss of $1.2 billion for Three Arrows, a crypto hedge fund that collapsed in June, according to the bankruptcy filing. Parent company Digital Currency Group took on most of the exposure by swapping Genesis’ $1.2 billion claim in Three Arrows with a $1.1 billion, 1%, 10-year promissory note. , according to the file. However, Genesis did not provide a full account of the $5.1 billion in liabilities claimed when filing for bankruptcy.

This run on the bank following the collapse of the FTX entities was outsized and severely affected the company’s available cash, according to the bankruptcy filing.

Meanwhile, Genesis’ parent company, Digital Currency Group, was also hit by market turmoil and lacked the cash to repay the company on some loans, adding pressure to debtors’ balance sheets, according to the bankruptcy case.

DCG owed more than $500 million to Genesis, according to a letter DCG chief executive Barry Silbert wrote to investors earlier this month.

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