We aim to update this page on Tuesdays and Fridays until a resolution is reached. This provides us with time to review updates and offer information as relevant. In order to allow us to secure the best outcome for you, we recommend that you check this page instead of contacting us directly.
Last update: Dec 2
Next Update: Dec 6
The events surrounding FTX have created unprecedented market turmoil, which has indirectly impacted our principal lender, Genesis. In consultation with their professional financial advisors and counsel, they have taken the decision to temporarily suspend redemptions and new loan originations in their lending business.
Genesis, DCG, and a group of creditors are still in communication. We don’t believe this issue will be resolved entirely within the next two weeks. Although a restructuring may take weeks or months, the process is often more beneficial than a company going bankrupt. Bankruptcies can take years and do not always lead to the recovery of funds. It's in the interest of all parties to be patient and give involved parties time to find the best solution.
We will continue to advocate on behalf of all Donut users and provide the next update on Tuesday, December 6th.
Frequently Asked Questions
How does this affect Donut?
Genesis is our principal lending partner at Donut. By pausing redemptions, Donut is unable to withdraw user funds from Genesis. To best protect your funds we have temporarily paused all deposits, withdrawals, and earnings on Donut until we have further clarity.
Why does this affect Donut?
While Donut had no direct exposure to FTX, FTT, or Alameda, and was initially informed that we had no secondary exposure, our principal lending partner (Genesis) recently informed us that this has had an effect on their liquidity and they would be temporarily suspending redemptions and new loan originations in their lending business while they seek a resolution.
All account services on Donut are temporarily paused. This includes deposits, withdrawals, earnings, and automated investments.
Will I continue to earn APY during this pause?
When can I have access to my funds?
At the moment, we are unable to provide a date that services will resume.
Is my account Safe?
Your account continues to be protected with 2FA, your PIN, and the AES-256 data security standard.
Will I suffer a loss?
Based on the information shared with us by Genesis, we understand this is a liquidity issue and that Genesis is working to shore up the necessary liquidity to meet their lending obligations, with Donut and our users. If this is a pure liquidity issue, then it’s likely no losses would occur. If there is a solvency issue, and Genesis does not have the assets to match their liabilities, a loss is possible. However, we are doing everything in our power to mitigate this outcome to the extent possible.
If this is a liquidity issue, why is a loss possible?
Liquidity issues can be solved in several ways. One way is to restructure loans, this could significantly delay payback periods by a few years, but ensures the return of funds in full. Other options include the selling of assets such as a loan book or raising capital. This provides immediate liquidity. Often, when assets are sold for immediate liquidity, buyers pay less than the current value of the asset to account for timing risk. This means the asset is sold at a discount. If Genesis were to do this, then all creditors could potentially suffer a loss in exchange for liquidity. We haven’t seen any proposals yet so this remains speculative, but we wanted to educate you on the possible outcomes.
Does Donut still have funds with their other lending partners?
All assets, apart from a small insignificant portion, have been safely withdrawn from other lending partners.
Can I withdraw funds from other lending partners?
Not at the moment. All withdrawals have been temporarily paused whilst we await further information.
What happens next?
Genesis, Digital Currency Group (their parent company), and the creditors (such as Donut) are all working towards the common goal to avoid bankruptcy. Going through bankruptcy is a lengthy, tiring process that could mean creditors and Donut users would not see any money for years. It’s in everybody’s interest to avoid that scenario. To advance conversations, we have joined a group of creditors in a similar position as Donut and are working to establish a timeline for resolution. We have a meaningful say in that grouping, and some possible scenarios include Digital Currency Group or Genesis raising some extra capital, or a restructuring of the loans to be repaid over a longer time frame. The range of impact from these outcomes could be repayment over a longer period of time or a possible haircut on funds. Genesis has appointed a financial advisor, Moelis, to conduct the process. We continue to work with these parties to find a resolution for users to redeem their funds and will make the next announcements once resolutions are confirmed.
What happens to direct deposits during the pause?
If you have not canceled your Direct Deposit with your employer, it will still arrive to Donut as expected. If your Direct Deposit is received by Donut, please reach out to us at [email protected] and we can provide options.
Will this impact Fall Fridays?
While our services remain paused, so too are Fall Fridays and all other Boost campaigns.
How can I keep up with developments?
We will continue to update this FAQ as new information becomes available. We recommend that you check this page instead of contacting us directly.