Back on November 11th, major cryptocurrency exchange FTX filed for bankruptcy, officially revealing its collapse to the rest of the crypto industry. The move had major consequences, creating even greater uncertainty in the market that drove a number of other crypto companies to the brink of collapse themselves. One of them was Genesis encryption company The US-based platform announced a freeze on customer withdrawals on November 16th.

At the time, the company said the move was caused by “unprecedented market turmoil,” which came just five days after the FTX crash. The company has continued to make statements, such as the one filed last week, where it said the move was taken in order to preserve customer assets and avoid filing for bankruptcy.

Now, the company says it expects it will take weeks, rather than days, to come up with a plan moving forward, suggesting its customers should prepare for a long wait before they can get their money back.

Genesis will need some time to resolve the situation

The new message came from Genesis interim CEO Derar Islim. He addressed the company’s customers on Wednesday, December 7, stating that the withdrawal freeze would not be resolved for several weeks.

In the letter, Islim stated that the company is determined to remain as transparent as possible and keep users informed throughout the process. The CEO added that Genesis has been consulting with its owner, Digital Currency Group (DCG), as well as many experienced advisors and experts in an effort to chart the path that will lead to recovery.

Back when the platform originally froze withdrawals, about $175 million was lost inside the platform, according to its letter. Then, the owner, DCG, handed over $140 million, but that wasn’t enough to deal with the liquidity problem Genesis was having. So, the only solution the company can come up with is to freeze withdrawals and request $1 billion in emergency financing.

The application was not granted, and reports that emerged at the time indicated that Genesis would likely follow FTX and file for bankruptcy if it did not receive outside support. The company decided to do everything they could to prevent this from happening and the first step was to hire restructuring lawyers who would help put together a recovery plan.

Historically, platforms freezing withdrawals were a sure sign that exchanges and lenders were on the brink of death. This has been shown in many recent examples, including Voyager, Celsius, BlockFi, and even FTX itself, which have all filed for bankruptcy over the past several months. They all took the same steps that Genesis has done so far.

The platform’s decision to freeze assets also affected Gemini Earn, with Genesis allegedly owed $900 million in customer assets. One positive thing about the situation is that not all Genesis users were affected, including those who were using the company’s custody and trading services.

Related

Dash 2 Tadawul – High Potential Pre-Selling

Advertisement

• Active pre-sale is live now – dash2trade.com
• The original code for the crypto signals ecosystem
• Know Your Customer verified and reviewed