The balance sheet from Genesis Global which recently halted withdrawal on its platform after the FTX bankruptcy filing has revealed that the brokerage firm has up to $2.8 million in outstanding loans.
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According to Bloomberg, 30% of its lending was made to several entities including its parent firm Digital Currency Group. Among them is a lending subsidiary identified as Genesis Global Capital which has been a key lender to Genesis Global Trading.
Chief Executive Officer (CEO) of Digital Currency Group Barry Silbert said in a letter that these loans were issued in the course of normal business.
The CEO said that in the “ordinary course of business, DCG has borrowed money from Genesis Global Capital in the same vein as hundreds of crypto investment firms. These loans were always structured on an arm’s length basis and priced at prevailing market interest rates.”
Genesis Parent Firm Owes $575M
DCG has a liability of $575 million to Genesis which is due for repayment in May 2023 and Silbert also described a $1.1 billion promissory note which is due June 2032. This DCG stepped in to assume liabilities from Genesis related to the implosion of the bankrupt hedge fund Three Arrows Capital.
These loans were used to “fund investment opportunities and to repurchase DGC stock from non-employee shareholders in secondary transactions previously highlighted in quarterly shareholder updates.”
Speaking about DCG, Silbert added “Let me be crystal clear: DCG will continue to be a leading builder of the industry and we are committed to our long-term mission of accelerating the development of a better financial system. We have weathered previous crypto winters and while this one may feel more severe, collectively we will come out of it stronger.”
He announced that the parent company has only raised $25 million in primary capital and is still looking at raising $800 million in revenue this year. Since halting lending withdrawal, Genesis had been searching for funds of up to $1 billion. For now, there is no possibility that the crypto brokerage firm will file for bankruptcy but if its search for new funds proves abortive, bankruptcy filing may be likely.
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