According to a confidential fundraising document cited by the WSJ, Genesis was looking for an emergency loan of $1 billion from its investors.
The document reveals a « liquidity crunch due to certain illiquid assets on its balance sheet ». Indeed, the company disclosed that they had $175 million locked in an FTX trading account, that was now inaccessible. The liquidity crunch and failure to get the loan forced Genesis to suspend customer redemption in the lending business, Genesis Global Capital.
The liquidity crisis caused Gemini, the Winklevoss-run crypto fund to freeze $700 million in customer funds held in the Gemini Earn program, which used Genesis Global Capital as its lending partner.