Crypto lender Genesis reported a total of $5.1 billion in liabilities shortly after it stopped its customers from withdrawing funds from the platform in November, according to the company’s bankruptcy filings.
Genesis Global Holdco LLC and two of its credit subsidiaries, which filed for bankruptcy protection Thursday in New York, are the latest crypto firms to fail as the contagion of the collapse of digital asset exchange FTX spreads.
Genesis halted the withdrawal shortly after FTX filed for bankruptcy in November. The lending company said at the time that they faced “abnormal withdrawal requests” that exceeded their liquidity.
Earlier this month, the Securities and Exchange Commission charged Genesis and its former partner Gemini Trust with selling unregistered securities. Some Gemini’s Earn users, who were lending their cryptocurrency through Genesis to earn interest, were unable to access their funds.
Read: ‘Super lame,’ Gemini co-founder Tyler Winklevoss says of the SEC charges
In a filing on Friday in bankruptcy court for the Southern District of New York, Genesis interim CEO Derar Islam attributed the company’s liquidity meltdown in part to a “run to the bank,” as the FTX implosion shook investor confidence.
Here’s a breakdown of what Genesis says happened:
It said creditors demanded repayment of $827 in loans in November, according to the bankruptcy filing.
The company is said to have posted a $1.2 billion loss against Three Arrows, a crypto hedge fund that collapsed in June, according to a bankruptcy filing.
Parent company Digital Currency Group took the bulk of the exposure by swapping Genesis’ $1.2 billion receivable into Three Arrows for a $1.1 billion, 1%, 10-year note, according to the filing.
However, Genesis did not provide a full accounting of the $5.1 billion in liabilities it claimed in the bankruptcy filing.
“This ‘run on the bank’ following the collapse of the FTX Entities was excessive and severely impacted the Company’s available liquidity,” the bankruptcy filing states.
Meanwhile, Genesis’ parent Digital Currency Group “was also affected by market turmoil and lacked the liquidity to repay the Company certain loans, adding pressure to debtors’ balance sheets,” the bankruptcy filing said.
DCG owed Genesis over $500 million, according to a letter DCG CEO Barry Silbert wrote to investors earlier this month.