Key Takeaways:
Customer redemptions and new loan originations have been suspended by Genesis, a cryptocurrency asset manager, through its lending division.
The change by Genesis has no impact on its other business units, such as cryptocurrency trading.
The newest indication of the industry fallout following the failure of major crypto exchange FTX last week was the announcement on Wednesday by cryptocurrency broker Genesis that redemptions and new loan originations are being temporarily suspended at its lending business.
“We have made the challenging decision to temporarily halt loan redemptions and new loan applications. We are putting forth a lot of effort to secure the necessary liquidity to fulfil our obligations to our lending clients “Genesis released a statement at the time.
According to Genesis, the lending entity Genesis Global Capital’s liquidity and duration profiles were significantly affected by 3AC’s insolvency. Since then, they have already been de-risking the book and improving the collateral’s quality and “liquidity profile“.
At the end of the third quarter, Genesis Global Capital, which had a total of $2.8 billion in active loans, stated that it was looking into new options for its lending division, which included finding a new origin of liquidity. Before November 25, the group wants to give customers a breakdown of its strategies.
Genesis Global asserted that its custody, spot trading, and derivatives trading operations are still functional.
The custody and trading arms of Genesis have not been impacted, according to a series of tweets posted Wednesday morning by the company’s principal investor, venture capital firm Digital Currency Group (DCG).
According to a source, Genesis here seems to be “trying desperately to avoid [bankruptcy],” which is commendable but expensive. However, stopping credit operations will probably have repercussions for the rest of the cryptocurrency industry.
Genesis tried to strengthen its balance sheet with a $140.0m equity transfusion a week after disclosing that its derivatives unit had approximately $175.0m in funds secured in a trading account at FTX.
Gemini Earn announced immediately after Genesis’ announcement that it would stop processing Earn redemptions going forward and gave no time frame for when they would be enabled again. Regular crypto withdrawals, according to Gemini, are unlikely to be affected.
To assist customers in quickly redeeming their funds from the Earn programme, Gemini is collaborating with the Genesis team. In the upcoming days, more details will be given.
