Another One Bites The Dust: Genesis Halts Operations Due To FTX Impact
According to an official announcement, Crypto lending firm Genesis is halting new withdrawal requests from its customers. The firm is a victim of the collapse of the crypto exchange FTX and is one of the many affected by bankruptcy protection filing in the United States.
The crypto lending firm Genesis stated the following about their operation and hinted at their next steps:
At Genesis we are entirely focused on doing everything we can to serve our clients and navigate this difficult market environment.
The collapse of FTX took the crypto market by surprise. The company’s former CEO, Sam Bankman-Fried, was a prominent figure in the industry, mingling with high-ranking government officials, celebrities, and regulators. Behind the scenes, Bankman-Fried was leading a house of cards.
Genesis Scrambles To Mitigate Effects Of FTX Collapse
The fallout of its implosion is still rippling across the nascent industry; this has been reflected in the crypto market’s value and in the several companies with FTX backing that lack clear direction about their future.
These sectors include their financial derivative and spot trading products. In this context, Genesis claims that there are divisions within the company that remains operational. The company stated:
We continue to support our clients who rely on us during volatile market conditions to manage their risk and execute on their business strategies.
In addition, Genesis’ broker, Genesis Global Trading is allegedly unaffected by recent events and operating “separate from all other Genesis entities.” It is the second time the company and its division have been affected by contagion this year.
The crypto hedge fund Three Arrows Capital (3AC) collapsed earlier this year. The implosion of this entity affected Genesis’ lending entity and negatively impacted its liquidity profile.
The company was cleaning up its book when FTX and its trading arm Alameda Research unexpectedly filed for bankruptcy. The crypto lending firm stated:
FTX has created unprecedented market turmoil, resulting in abnormal withdrawal requests which have exceeded our current liquidity. Our #1 priority is to serve our clients and preserve their assets. Therefore, 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 company claims to be working with experts to provide customers with a solution that might include “sourcing new liquidity.” The company will present a plan next week, according to the announcement.
Digital Currency Group (DGC), the parent company of major companies in the nascent sector, including news outlet CoinDesk, Grayscale, and others, made a separate announcement. The company claims that the FTX debacle has not impacted its business operations.
The impact lies with the lending business at Genesis and does not affect Genesis’s trading or custody businesses. Importantly, this temporary action has no impact on the business operations of DCG and our other wholly owned subsidiaries.
— Digital Currency Group (@DCGco) November 16, 2022
OhNoCryptocurrency via https://www.ohnocrypto.com/ @Reynaldo Marquez, @Khareem Sudlow