Summary: Another crypto company announced changes in operations due to FTX’s contagion. CoinDesk reported that Genesis Global Trading’s lending department temporarily suspended customer withdrawals and new loan requests on Wednesday. Interim CEO Cerar Islim gave the update during a call with clients. The change in operation did not affect Genesis Trading which was exposed to Three Arrows Capital. CoinDesk reported that withdrawals on Genesis Global Capital were halted Wednesday after exposure to Sam Bankman Fried’s crypto exchange FTX. […]
Another crypto firm announced changes in operations due to FTX contagion. Interim CEO CerarIslim shared the news during a client call on Wednesday. Islim also noted that new loan originations were stopped along with withdrawals.
Digital Currency Group (DCG), the parent company of the firm, also shared a statement. It stated that the “decision was taken in response to extreme market dislocations and loss of confidence caused by the FTX Implosion”.
DCG also oversees companies like CoinDesk and Foundry, Grayscale and Luno. After Terra’s $40B implosion, Genesis under Michael Moro filed a $1.2B claim against Su Zhu’s crypto hedge fund Three Arrows Capital (3AC) at the time.
Turbulence with the crypto lender could signal a major downturn in the crypto industry. In addition to the damage caused by FTX’s alleged frauds, Genesis was the largest lending desk before Terra wiped off $40 billion.
According to a Q4 Market Activity Snapshot, the original OTC Bitcoin trading desk opened in 2013 with $12.5 billion in active loans, and derivatives volume of $21 billion.
Amanda Cowie, DCG’s VP of communications & marketing, stated that the company’s custody arrangements and trading operations are unaffected by this decision. Before the exchange stopped customer withdrawals, the company’s derivatives arm was believed to have held $175 million worth crypto assets on FTX.
Gemini Earn Program in Trouble After Genesis Stops Withdrawals
Gemini’s Earn program customers were also affected by this news. According to a blog post, the crypto exchange will not meet its redemption service-level-agreement period of five days. The Winklevoss twins founded the platform and selected Genesis as a lending partner.
We are disappointed that the Earn Program SLA will not be fulfilled, but we are encouraged to see Genesis’ and Digital Currency Group’s commitments to fulfilling their obligations to customers under the Earn Program.
FTX contagion continues its attack on firms and cripples operations across crypto’s ecosystem. After former Michael Moro had resigned, Cerar Islim was appointed interim Genesis CEO. After billions of dollars in exposure to Three Arrows Capital (a crypto hedge fund created by Su Zhu, Kyle Davies), Moro decided to resign.
3AC collapsed following Terra’s contagion that spread fear throughout the market. Similar to the 3AC collapse, Terra’s contagion spread fear through the market. The FTX scandal seems to have triggered a domino effect within the digital asset community.
Bankman-Fried’s company filed for bankruptcy in New York City and Delaware at press time. Several U.S. Federal agencies, including the Justice Department and SEC, launched investigations into SBF’s empire.