Genesis Debt Entices Market Maker B2C2

Genesis’ crypto lending division paused redemptions on more than $2 billion of loans just this morning in New York. And fellow lender B2C2 is already looking to profit from the firm’s plight. 

It’s not yet clear whether Genesis’ liquidity troubles are temporary, but B2C2 has already tossed its hat into the ring to purchase Genesis’ loans at discounted prices.

Max Boonen, founder of the digital asset liquidity provider B2C2, offered to purchase Genesis’ loans shortly after news broke of the firm’s redemptions woes. 

Boonen told Blockworks he expects a potential deal would be finalized within the week, and B2C2 is looking for quality, short term loans in the ballpark of six months. There’s no word from Genesis yet on their preferred term — or if they’d even move forward on a deal — but representatives from the company have already engaged in preliminary talks with Boonen, he said. 

Boonen declined to comment on specific numbers for a potential deal, saying he has yet to see Genesis’ balance sheet.

Alameda Research — the asset manager owned by former FTX CEO Sam Bankman-Fried — was among a small circle of crypto market makers. Apart from Genesis, precious few spot market makers would remain, including Cumberland, Wintermute and B2C2.

FTX struck similar deals following the Terra and Three Arrows Capital collapses with Bankman-Fried calling troubled lender bailouts his responsibility. Boonen doesn’t see a possible Genesis loan deal in the same light.

“We’re not doing this out of an altruistic impulse,” Booned said. “We think that there’s actually money to be made” by acquiring discounted loans and bolstering B2C2’s reputation.

An asset sale between two of crypto’s largest market makers would grant Genesis quick liquid assets as it looks to avoid insolvency. Binance is also considering buying Genesis’ loans, Blockworks reported.

Genesis “seems to be at all costs trying to avoid [bankruptcy],” according to a source familiar with the matter, adding that the gambit would be risky and expensive. The source was granted anonymity to discuss sensitive business dealings. 

A spokesperson for Genesis did not immediately return a request for comment. 

Whether Genesis can get anywhere close to face value on its assets will depend on whether it can stay above water.

“If [Genesis is] actually insolvent, the loans from their lenders would be worth pennies on the dollar,” Boonen said.

Michael Bodley contributed reporting.

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