Genesis Global Trading’s Crypto Lending Arm Halts Withdrawals, $2.8B in Active Loans
Genesis Global Trading’s crypto lending arm has paused withdrawals and new loan originations, citing “extreme market dislocation,” the firm tweeted Wednesday. The unit reported $2.8 billion in total active loans in Q3 2022.
Genesis Global Capital Halts Withdrawals and New Loans Originations Due to Market Turmoil
Genesis Global Capital, the cryptocurrency lending arm of digital asset investment bank Genesis Global Trading, is reportedly halting withdrawals on a temporary basis, it said in a tweet. Further, Genesis Global Capital, which has reported $2.8 billion in total active loans in Q3, is also pausing the issuance of new loans.
The decision comes less than a week after crypto exchange FTX filed for bankruptcy, the latest in a series of blows the crypto industry received in 2022. Once worth around $32 billion, FTX collapsed in just several days after reports that it used customer funds to cover the liabilities of its sister firm Alameda Research.
“Today Genesis Global Capital, Genesis’s lending business, made the difficult decision to temporarily suspend redemptions and new loan originations. This decision was made in response to the extreme market dislocation and loss of industry confidence caused by the FTX implosion.”– Amanda Cowie, vice president of communications and marketing at DCG.
Cowie said the move impacts Genesis’s lending arm, though it does not affect Genesis’s trading or custody businesses.” The temporary halt will also not affect the business activities of Digital Currency Group (DCG), the group that owns Genesis.
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Gemini Earn Pauses Withdrawals in the Wake of Genesis’s Announcement
FTX’s implosion was one of the key events that forced Genesis Global Capital to halt withdrawals, according to interim CEO Derar Islim. He said that the exchange’s unexpected collapse resulted in massive withdrawal requests that exceeded Genesis’s available liquidity.
Genesis revealed it had $175 million in locked funds in FTX last week, after which the parent company DCG poured $140 million of equity into Genesis to reinforce its balance sheet. Genesis said the infusion would “allow us to support our clients and the growing demand for our services.”
Genesis’s partner and crypto exchange Gemini is also pausing withdrawals at its Gemini Earn program in the wake of the latest developments at Genesis. According to Gemini, the Earn program “will not be able to meet customer redemptions within the service-level agreement of five business days.”
Gemini, which introduced its native custody offering in 2019, launched a crypto-staking reward service in August. The crypto exchange sustained heavy losses this year following the collapse of the hedge fund Three Arrows Capital (3AC).
Do you think more crypto firms could make similar moves in the future due to FTX’s collapse? Let us know in the comments below.