Crypto lender Genesis suspends withdrawals for its institutional customers. Is Genesis the next shoe to drop?
Nickie Louise
Posted On November 16, 2022
The contagion of FTX collapse is slowly spreading across the crypto industry. Last week, crypto lender BlockFi suspended withdrawals as fear of insolvency and liquidity crunch spreads across crypto markets. Then yesterday, crypto lending platform SALT announced it was pausing all withdrawals and deposits, citing exposure to the now-bankrupt crypto exchange FTX.
This morning, another crypto lending giant Genesis’ crypto-lending unit is suspending withdrawals and originations in its lending business, according to a report by Coindesk. The affected unit, known as Genesis Global Capital, serves an institutional client base and had $2.8 billion in total active loans as of the end of the third quarter of 2022, CoinDesk Reported.
Genesis also took to social media to announce the suspension of redemptions and new loan originations. Genesis said that FTX has “created unprecedented market turmoil, resulting in abnormal withdrawal requests which have exceeded our current liquidity.”
In a thread post, the company said:
“The default of 3AC negatively impacted the liquidity and duration profiles of our lending entity Genesis Global Capital. Since then, we have been de-risking the book and shoring up our liquidity profile and the quality of our collateral. However, FTX has created unprecedented market turmoil, resulting in abnormal withdrawal requests which have exceeded our current liquidity.”
However, FTX has created unprecedented market turmoil, resulting in abnormal withdrawal requests which have exceeded our current liquidity.
— Genesis (@GenesisTrading) November 16, 2022
“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,” said Amanda Cowie, vice president of communications and marketing at DCG.
“This decision impacts the lending business at Genesis and does not affect Genesis’s trading or custody businesses. Importantly, this decision has no impact on the business operations of DCG and our other wholly owned subsidiaries,” Cowie added.
The announcement comes just three months after the crypto lending giant laid off 20% of its workforce. CEO also departed the company. Meanwhile, Genesis had previously revealed it had $175mm exposure to FTX.
Crypto broker Genesis is the latest casualty of a $2 trillion digital-asset market wipeout following its exposure to the now-bankrupt crypto hedge fund Three Arrows Capital. On Wednesday, Genesis announced its CEO Michael Moro is stepping down and the company is cutting 20% of its 260-person workforce or 52 jobs.
Derar Islim, who joined Genesis in 2020 and has overseen the development of strategy and key core functions, will take over as interim CEO while the company searches for a permanent replacement, the company said in a statement.
