On Wednesday morning, Genesis announced to clients that it would pause withdrawals from its lending arm, citing “unprecedented market turmoil” due to the now-bankrupt crypto exchange FTX.
“In consultation with our professional financial advisors and counsel, we have taken the difficult decision to temporarily suspend redemptions and new loan originations in the lending business,” the firm wrote.
Genesis reported $12.5 billion active loans outstanding and processed over $130.6 billion loans in 2021.
The news comes amid the collapse of crypto exchange FTX, of which Genesis’ derivatives trading arm also revealed roughly $175 million in exposure.
“Our operating capital and net positions in FTX are not material to our business. Circumstances surrounding FTX have not impeded the full functioning of our trading franchise,” the firm tweeted on November 10.
We recognize how challenging this past week has been due to the impact of the FTX news. At Genesis we are entirely focused on doing everything we can to serve our clients and navigate this difficult market environment.
A day later, the crypto broker’s parent company Digital Currency Group (DCG) said that it would be stepping in to provide Genesis with $140 million in equity. Following today’s news, DCG said that Genesis’ “this temporary action has no impact on the business operations of DCG and our other wholly owned subsidiaries.”
The move is just the latest fallout from the FTX contagion. Once a starlet of the crypto bull run, the crypto exchange filed for Chapter 11 bankruptcy last Friday. There are reportedly over one million creditors that have been listed in the filing.
Crypto exchange Gemini warned customers today that there may be delays for withdrawals on its Earn product.
The delays are due to Genesis Global Capital’s announcement today that it would be pausing withdrawals on its lending platform. Genesis services the crypto exchange’s Earn product, which lets users earn interest for depositing idle crypto.
“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,” Gemini’s post read.
The announcement added that the crypto exchange was working to redeem user funds from its Earn program “as quickly as possible.” Gemini said that the move “does not impact any other Gemini products and services.
This week alone, Liquid Global and SALT both halted withdrawals on their platforms. BlockFi, another popular crypto lender, is now mulling bankruptcy after suffering “significant exposure to FTX.”
David Warsh is a leading expert in the field of cryptocurrency and blockchain technology. With over a decade of experience in the industry, he has a deep understanding of the intricacies of digital currencies and the potential they hold for revolutionizing various industries.
