According to Genesis’ statement, “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.”
Genesis becomes the latest firm affected by FTX’s collapse as its lending entity halts loan originations and redemptions due to liquidity issues.
According to Genesis’ tweets, its lending arm Genesis Global Capital was already facing liquidity problems due to 3AC’s bankruptcy. It alleged that the collapse of FTX has created unprecedented market turmoil. This has led to abnormal withdrawal requests that exceed Genesis’ liquidity.
Genesis also clarified that the suspension of services is limited to its lending platform. The firm's trading and custody businesses remain operational, with Genesis noting,
“Genesis Global Trading, our broker/dealer that holds our BitLicense, is independently capitalized and operated.”
The news came a few days after Genesis reported that its derivative unit had $175M exposure to FTX. In response, Genesis’ parent company, Digital Currency Group (DCG), announced its plans to provide $140M as a cash infusion to Genesis.
Genesis pausing its lending services also resulted in Gemini warning its users about potential delays in withdrawals for its Earn product. Gemini added that it will work with Genesis to allow users to withdraw their funds from the Earn product as soon as possible.
On the other hand, Ledn reported that it has no exposure with Genesis, adding that the two firms did not have any lending relationship since October 2022. Similarly, Finblox tweeted that it does not have any exposure to Genesis.
