Due to the FTX fall producing liquidity concerns, the top institutional trading business Genesis Global, which is controlled by Digital Currency Group (DCG), has stated that its crypto-lending arm, Genesis Global Capital, has banned withdrawals.
Amanda Cowie, VP of communications and marketing at DCG stated “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.”
The spot trading, derivatives trading, and custodial businesses that Genesis operates will all continue to function normally.
“We continue to help our customers who depend on us during unpredictable market circumstances to manage their risk and execute on their business objectives,” Genesis said in a tweet. “We continue to support our clients who rely on us to execute on their business strategies.”
Genesis noted that the failure of 3AC had a negative impact on the liquidity and duration profiles of Genesis Global Capital. Since then, they have been de-risking the book and shoring up both its liquidity profile and the quality of its collateral in order to compensate for the negative effects of the collapse of 3AC.
But FTX generated a degree of market volatility that had never been witnessed before, which resulted to an unusually large number of withdrawal requests that exceeded Genesis’s available liquidity. This was the first time that this had ever happened.
Genesis has hired advisors from the outside to research all of the prospects that are now accessible, and the group is currently making preparations to submit a plan for Genesis Global Capital within the next week.
Genesis said a few days ago that the Genesis derivatives firm has around 175 million dollars in locked money in the FTX trading account.
“To reemphasize, Genesis has no ongoing lending relationship with FTX or Alameda,” the firm tweeted but things have turned around since then.
Even before that Genesis noted it has a trading relationship with FTX, amongst other exchanges, and its exposure to FTX has no impact on its ability to serve its clients. And the situation got messy as everyone expected.
A lot of crypto firms are facing liquidity issues in the aftermath of the FTX collapse. Among them, crypto lender BlockFi is preparing to file for a chapter 11 bankruptcy and axing up jobs. They have already halted withdrawals and deposits for customers.
Compiled by Coinbold