Gemini is attempting to recoup $900 million of client funds which it lent to Genesis to generate yields for its interest-bearing Gemini Earn accounts.
In addition to Genesis, Digital Currency Group also owns Grayscale, the embattled digital asset manager. Grayscale is facing difficulties of its own, with its Grayscale Bitcoin Trust trading at a 45% discount to the price of its underlying asset even as bitcoin trades at multiyear lows."DCG has never missed an interest payment to Genesis and is current on all loans outstanding; next loan maturity is May 2023," he added.
Three Arrows Capital co-founder Zhu Su also weighed in on the matter Tuesday. In a Twitter thread, Su said that Digital Currency Group "took substantial losses in the summer from our bankruptcy" and other firms impacted by the failure of algorithmic stablecoin terraUSD. Su, whose companyafter making risky bets across the industry, has been active on Twitter even as lawyers seek to establish his whereabouts and reportedly faces investigations from U.S. regulators.
Gemini and Genesis are the latest firms to get caught up in the messy, entangled contagion resulting from FTX's fall into bankruptcy last year. Evgeny Gaevoy, founder and CEO of crypto market maker Wintermute, said in a November interview that industry contagion is expected to be widespread "because anyone in the crypto space and beyond crypto could have been exposed to them one way or another." Wintermute itself had funds stuck on FTX, the amount of which was "within our risk tolerances and does not have a significant impact on our overall financial position," according to a Nov.
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