Following the bankruptcy of Genesis FTX, one of the oldest and most well-known crypto lending platforms, withdrawal requests exceeded available liquidity, it announced that it will suspend lending and new credit creation. Crypto broker firm Genesis is suspending payments and new credit creation in its lending space after encountering what it describes as “abnormal withdrawal requests” following the collapse of FTX.
According to Derar Islim, who serves as interim CEO, withdrawal requests exceeded the available liquidity at Genesis Global Capital, the firm’s lending arm. Islim said Genesis is hiring consultants to explore all possible options, including raising new financing, and will present a plan for its lending business.
The current situation will only affect the lending business, according to Islim, who said Genesis’ spot and derivatives trading and custody businesses will “remain fully operational.” The sudden bankruptcy of FTX continues to spread across the crypto markets as panicked customers rush to withdraw their holdings from other platforms.
Their Activities Were Closely Monitored To Understand The State Of The Industry
Seen as the counterparty to many institutions in the industry, Genesis’ financial health was closely watched for any indication of industry strength or potential signs of contamination. Genesis is known as one of the oldest and best-known cryptocurrency brokers offering trading and custody services to professional traders in digital assets. Over the past few years, the company has positioned itself as one of the largest cryptocurrency lenders, allowing funds or other market makers to borrow dollars or virtual currencies to cover their trades. The lending business has declined significantly this year, falling from $44.3 billion in the first three months to $8.4 billion in the third quarter.
$175 Million Pledged In FTX Account
Last week, Genesis announced that $175 million of its funding on the derivative side of its FTX account was pledged, and that it would provide $140 million in funding from its parent company, Digital Currency Group (DCG). The firm’s lending business was previously impacted by the bankruptcy of Three Arrows Capital, the crypto hedge fund it has lent 2.4 billion to. According to court records, Three Arrows invested about half of the required capital to settle the debt. DCG assumed all of the outstanding debts and became the largest creditor of the bankrupt hedge fund.
Genesis experienced a wave of departures from senior executives this year and went on a staff cut. In August, the company parted ways with 20 percent of its then-260 workforce and appointed Islim as interim CEO, replacing Michael Moro. Later that month, another senior executive, Noelle Acheson, announced her resignation.
Matthew Ballensweig, head of sales and trade, announced in September that he would step down to a consultant position, and in October Michael Patchen, the head of the Risk Specialization division, announced he was leaving after three months in the post.
