The contagion of the FTX bankruptcy does not stop and now also involves the cryptocurrency lender Genesis Trading. The New York-based company halted the recalls due to “unprecedented market turbulence,” he said. The bankruptcy filing of the Sam Bankman-Fried group resulted in “abnormal withdrawal requests that exceeded current liquidity,” Genesis said in a statement. The latter had $175 million of funds locked up on FTX last week and just hours before the Bahamas-based exchange filed a default statement, it received $140 million from parent company Digital Currency Group (DCG).
Genesis allows the loan of virtual currencies guaranteeing a return of up to 10% and at the end of the third quarter of this year it had approximately 2.8 billion dollars in loans, according to information released by its site. In 2021, it originated $131 billion in loans. The firm was involved in the bankruptcy of Three Arrows Capital in July, to which it had lent $2.4 billion. Once again, DCG came to the rescue by acquiring Genesis’ entire $1.2 billion claim to the crypto hedge fund. Now Genesis has declared that it has hired the best consultants in the sector to find a solution to the situation that has become precarious, while next week it will draw up a loan plan, which includes the possibility of finding other liquidity.
Cryptocurrencies: The Ripple Effect of Blocking Genesis Withdrawals
The shock wave of the Genesis withdrawal block has affected its partners, especially Gemini Earn, a cryptocurrency lender to the twins Cameron and Tyler Winklevoss. The company had formulated a pickup acceptance schedule within 5 business days. However, a company communication reads as follows: “We are aware that Genesis Global Capital, LLC (Genesis), the Earn Program lending partner, has suspended withdrawals and will not be able to honor customer refunds under the agreement. 5 business day service level (SLA). We are working with the Genesis team to help customers redeem their Earn funds as quickly as possible. We will provide more information in the coming days.”
Then, referring to the missed schedule, the company tried to send a message of hope to its customers, adding: “The past week has been an incredibly busy and stressful time for our industry. We are disappointed that the Earn SLA is not being met, but are encouraged by the commitment of Genesis and its parent company Digital Currency Group to do everything in their power to meet their obligations to customers under the Earn Program . We will continue to work with them on behalf of all Earn customers. This is our top priority. We greatly appreciate your patience.”
At the moment, there appears to be no impact on another Genesis partner, cryptocurrency platform Luno, which has said its clients’ funds are safe. In this regard, he assured the latter that the company has taken measures to guarantee access to their money in case they are prevented from making withdrawals from Genesis. However, the situation at the moment does not leave anyone alone.