November 30, 2022


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The Genesis Trading crypto broker stops withdrawals in the lending unit

The Genesis Trading crypto broker stops withdrawals in the lending unit

Genesis Trading has halted withdrawals in its lending unit as the crypto financial services group blamed “unprecedented market turmoil” caused by the collapse of Sam Bankman-Fried’s FTX.

Genesis, which plays a major role in fixed-income markets for digital assets, said its decision to suspend redemptions and issuance of new loans came after “abnormal withdrawal requests that exceeded our current liquidity.”

The problems in Genesis are the latest sign of that Bankman Fried’s FTX fails A cryptocurrency exchange and Alameda Research, his trading company, are sending shock waves through the crypto industry. On Wednesday, the US House of Representatives Financial Services Committee announced a hearing regarding the collapse of FTX and its impact on the cryptocurrency market.

New York-based Genesis allows customers to lend their coins for returns of up to 10 percent, while also offering similar services to groups including exchange operator Gemini, run by twins Tyler and Cameron Winklevoss. Genesis also lends cryptocurrency to institutions such as hedge funds and family offices.

Genesis secured $2.8 billion in “active loans” at the end of the third quarter of 2022, according to its website. It originated $131 billion in loans in 2021.

Its parent company, Digital Currency Group, owned by billionaire Barry Silbert, said the suspension of withdrawals “was done in response to… severe market turmoil and the loss of industry confidence caused by the FTX implosion.”

The suspension also raised concerns about its business partners. Gemini said Wednesday that it is “aware” of the problems facing Genesis.

Gemini and Genesis are partners in a product that gives customers interest for lending their crypto assets. Genesis is the premier lending partner.

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“We are working with the Genesis team to help customers get their money back . . . Gemini said.

Another Genesis partner, crypto platform Luno, said its clients’ assets are secure, adding that it has “taken steps” to ensure clients have access to their funds “in the event that Genesis cannot withdraw.”

Genesis said it has hired “the best advisors in the industry to explore all possible options” and will present a plan for the lending business next week. She added that she is “working tirelessly” to solve problems, including “getting new cash”.

Last week, Genesis said it had $175 million in funds stuck in FTX. On Friday, just hours before Bankman-Fried’s Exchange declared bankruptcy, the parent company poured $140 million into Genesis — the second lifeline DCG has given Genesis this year.

B2C2 CEO Nicola White said the cryptocurrency market maker was ready to buy some Genesis loan writers. “We’re not going to take every customer,” she said, adding that the company will use strict risk management procedures.

Genesis was It was hit hard by the failure of Three Arrows Capital, a Singapore-based cryptocurrency hedge fund that filed for bankruptcy in July when its bets on bitcoin and other cryptocurrencies soured. Court documents showed that Genesis loaned Three Arrows $2.4 billion. Over the summer, DCG assumed Genesis’ entire $1.2 billion claim against Three Arrows.

Genesis’ trading and custody business is fully operational, Genesis said, adding that its trading arm is “capitalized and operated independently – and separate from all other Genesis entities.”

DCG, which also owns crypto asset manager Grayscale Investments and news site CoinDesk, said there was “no impact on the business operations of DCG and our other wholly owned subsidiaries.”

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Additional reporting by Katie Martin