Yet another crypto company is facing issues after the collapse of the crypto exchange FTX.
Genesis Global Capital, a cryptocurrency lender, has halted withdrawals and loan applications.
According to a Twitter thread shared by Genesis Trading on November 16th, the decision was made in consultation with professional financial advisors and counsel.
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The company claims that the settlement to halt redemptions was made due to FTX, which caused “unprecedented market turmoil” that resulted in “abnormal withdrawal requests which have exceeded <Genesis> current liquidity.”
On top of that, the company added that its liquidity was negatively affected by the downfall of hedge fund Three Arrows Capital, which occurred in June.
It is worth noting that Genesis is a subsidiary of a venture capital company Digital Currency Group (DCG). Therefore, the vice president of communications and marketing at DCG, Amanda Cowie, shared DCG's take on the situation.
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."
In its Twitter thread, the company noted that it hired the best industry advisors to explore all possible options. Genesis promised to provide a detailed plan for further actions for lending businesses during the fourth week of November.
We’re working tirelessly to identify the best solutions for the lending business, including among other things, sourcing new liquidity.”
The company highlighted that its “spot and derivatives trading and custody businesses” are fully operational.
Shortly after Genesis announced that it halted withdrawals, several companies connected to the company started sharing their stance on the situation.
Cryptocurrency exchange Gemini revealed that Genesis Global is a lending partner for the Gemini Earn program. Therefore, the company will not be able to process user redemptions within five business days. However, Gemini highlighted that “all customer funds held on the Gemini exchange are held 1:1 and available for withdrawal at any time.”