B2C2 plans to acquire Genesis Global Capital loan portfolio

The cryptocurrency OTC-platform B2C2 plans to acquire a loan portfolio worth about $2.8 billion from its financially distressed rival Genesis Global Capital.

I didn’t have Genesis on my bingo card. Wow. That leaves very few players in the OTC market…@B2C2Group wishes to extend an offer to purchase loans from @GenesisTrading‘s book to alleviate the current liquidity shortfall.

— Max Boonen (@maxboonen) November 16, 2022

“Genesis wasn’t in my bingo card. Wow. That leaves very few players left in the OTC market… B2C2 intends to make an offer to purchase loans to alleviate Genesis’s current liquidity shortfall,” wrote Max Boonen, founder of the platform.

He told Blockworks that he expects the potential deal to close within a week. He said representatives from the companies had already held consultations. Boonen declined to name a possible purchase amount, saying that he had yet to review Genesis’s balance sheet.  

“We’re not doing this out of altruism. We think there’s real money to be made,” he added.

B2C2 clarified that the loans to be purchased must meet the platform’s risk-management framework.

“The company can support the market more broadly by working with Genesis and its counterparties to novate existing loans,” said B2C2.

The company is in a position to support the wider market by offering to work with Genesis and their counterparties to novate existing loans at Genesis Global Capital to B2C2. Loans will have to fall within our established risk management framework to qualify.

— B2C2 (@B2C2Group) November 16, 2022

According to Blockworks, Binance founder and CEO Changpeng Zhao is also interested in acquiring Genesis’s loan portfolio. The publication’s source said the exchange chief has already asked for additional information about the OTC platform’s financial state.

According to another source, Genesis’s parent company—Digital Currency Group (DCG)—is unlikely to consider offers below $2 billion.

Genesis paused withdrawals and the issuance of new loans. This occurred amid heightened inquiries from clients after the collapse of FTX.

Subsequently, the Winklevoss twins’ Gemini exchange announced a five-day pause on payments under the Earn lending program. Genesis is a lending partner for this company’s lending product.

1/6 We are aware that Genesis Global Capital, LLC (Genesis) — the lending partner of the Earn program — has paused withdrawals and will not be able to meet customer redemptions within the service-level agreement (SLA) of 5 business days. https://t.co/9e48pF3Ymn

— Gemini (@Gemini) November 16, 2022

Thereafter, Tether, the issuer of the USDT stablecoin, said it is absolutely not linked to Genesis or Gemini Earn.

Tether Confirms Zero Exposure To Genesishttps://t.co/KHEx2HWoJ1

— Tether (@Tether_to) November 16, 2022

“USDT is 100% backed by reserves, the assets of which exceed the commitments. Tether owns a strong, conservative and liquid portfolio consisting of cash, their equivalents and U.S. Treasury obligations,” the report says.

The operator of the USDC stablecoin, Circle, confirmed that Genesis is a counterparty to the Yield product. As of November 16, the outstanding client debt balance stood at $2.6 million. The firm said that loan remaining have a “over-collateralized” cushion.

“Circle guarantees that the loans are protected from potential losses,” the company said.

2/ Outstanding loan balances remain overcollateralized, and Circle will ensure loans remain protected from potential losses.

— Circle (@circle) November 16, 2022

Earlier in July, the bankrupt cryptocurrency hedge fund Three Arrows Capital owed Genesis $2.36 billion. DCG then provided support to its subsidiary by taking on certain obligations.

In November Genesis said that on the collapsed FTX blocked around $175 million of its derivatives division.

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