Crypto broker Genesis Trading has suspended redemptions and loan originations in its lending unit as the impact of the collapse of cryptocurrency exchange FTX ripples through the digital asset market.
“FTX has created unprecedented market turbulence, resulting in abnormal withdrawal requests that have exceeded our current liquidity,” the New York-based group said in a statement on Wednesday.
Genesis is one of the largest financial services providers in the crypto market, originating over $131 billion in loans last year. It was hit hard by the failure of Three Arrows, the Singaporean crypto hedge fund that filed for bankruptcy in July when its bets on bitcoin and other cryptocurrencies soured. Court documents showed Genesis lent Three Arrows $2.4 billion in undersecured loans.
However, the failure of the $32 billion crypto exchange of Sam Bankman-Fried and its sister trading company Alameda Research has sent shockwaves through the industry, with rival exchanges and lenders rushing to appease concerns. fears of contagion in recent days.
Genesis said it has hired “the best advisers in the industry to explore all possible options” and will outline a plan for loan activity next week. “We are working tirelessly to identify the best solutions for the lending industry, including but not limited to finding new liquidity.”
The group’s trading and custody businesses remained fully operational, he added. The business arm was “independently capitalized and operated – and separate from all other Genesis entities.”
Its parent group, Digital Currency Group, which is owned by billionaire Barry Silbert, said there was “no impact on the business operations of DCG and our other wholly owned subsidiaries”.
Gemini, another crypto company, said it was “aware” of the situation at Genesis. The group is partnering with Genesis on a product it offers by offering clients returns similar to fixed income in exchange for lending their crypto assets.