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The lending unit of cryptocurrency investment bank Genesis Global Trading suspended redemptions and new loans due to the collapse of FTX on November 16. Following the news, crypto exchange Gemini announced delays in withdrawals from its Earn product, in which Genesis is a lending partner.
Key Takeaways
- Genesis Global Capital caught up in the FTX collapse and paused new loan originations and redemptions.
- The company had $175 million in assets locked on the failed exchange.
- After hearing the news, crypto exchange Gemini announced delays in withdrawals from its Earn product, in which Genesis is a lending partner.
Genesis Suspends Withdrawals
Genesis and its subsidiaries are owned by Barry Silbert’s Digital Currency Group (DCG) which also owns the CoinDesk news platform. It was CoinDesk that first reported about the poor financial health of FTX.
Genesis Global Capital said last week that its derivatives unit had around $175 million in funds locked up with FTX and DCG moved to bolster the Genesis balance sheet with an investment of $140 million.
The Genesis exchange rushed to distance itself from the fallout, saying: “This does not impact any other Gemini products and services. Gemini is a full-reserve exchange and custodian. All customer funds held on the Gemini exchange are held 1:1 and available for withdrawal at any time”.
Gemini Delays Withdrawals on Lending Program
After hearing the news, crypto exchange Gemini announced that there would be withdrawal delays with its Earn product, in which Genesis is a lending partner. The exchange allows Earn users to profit from staking their cryptocurrency deposits for an annual yield.
The company said that Genesis Global Capital “will not be able to meet customer redemptions within the service-level agreement (SLA) of 5 business days”. The announcement from the crypto exchange said they were working to redeem customers of the Earn program “as quickly as possible.”
Genesis Trading reported it had $2.8 billion of active loans, according to the company’s website. The suspension of withdrawals at its lending business was due to “extreme market dislocation and loss of industry confidence caused by the FTX implosion,” the group said.
The Bottom Line
Earlier this week, BlockFi, a crypto lending platform with significant exposure to FTX, suspended withdrawals and reportedly prepared to file for bankruptcy. With Genesis also halting withdrawals, other crypto firms and projects could soon be impacted by the FTX crisis.
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Image and article originally from www.investopedia.com. Read the original article here.