Crypto lender Genesis reportedly owes nearly $1 billion to the customers of crypto exchange Gemini due to the collapse of FTX.
According to a new report by the Financial Times, anonymous sources familiar with the matter say that Gemini is attempting to recover the funds from Genesis after the crypto broker was affected by FTX, a crypto exchange that declared bankruptcy last month.
Previously, Genesis and Gemini had formed a partnership to create Gemini’s Earn program, which allowed retail investors to loan out their digital assets to earn interest.
Last month, Gemini was forced to halt customer withdrawals from the Earn program when Genesis faced liquidity issues.
In an attempt to remedy the situation, Genesis has hired an outside banking firm to help the lender explore all of its options, while Gemini formed a creditor’s committee as a means of recouping the funds, according to the report.
The report also finds that Gemini’s committee is currently in talks with both Genesis and Digital Currency Group (DCG), the crypto lender’s parent company. According to the report, DCG owes Genesis a total of $1.7 billion in loans.
One unnamed source told the Financial Times that due to the entanglement of obligations, Genesis and DCG are negotiating together with creditors.
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