The leading institutional trading firm Genesis Global owned by Digital Currency Group (DCG) announced its crypto-lending arm Genesis Global Capital suspended withdrawals citing the FTX crash causing liquidity issues.
Amanda Cowie, VP of communications and marketing at DCG stated “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.”
Genesis’s spot and derivatives trading and custody businesses will remain fully operational.
“We continue to support our clients who rely on us during volatile market conditions to manage their risk and execute on their business strategies,” Genesis tweeted.
Genesis noted that the collapse of 3AC negatively impacted the liquidity and duration profiles of Genesis Global Capital and since then they have been de-risking the book and shoring up its liquidity profile and the quality of its collateral.
Also Read: Genesis Trading Unveils its Exposure To Three Arrows Capital
But FTX created unprecedented market turmoil, resulting in abnormal withdrawal requests which have exceeded Genesis’s current liquidity.
Genesis has hired advisors to explore all possible options and next week, the team is planning to deliver a plan for Genesis Global Capital.
A few days back, Genesis announced the Genesis derivatives business currently has around $175M in locked funds in the FTX trading account.
“To reemphasize, Genesis has no ongoing lending relationship with FTX or Alameda,” the firm tweeted but things have turned around since then.
Even before that Genesis noted it has a trading relationship with FTX, amongst other exchanges, and its exposure to FTX has no impact on its ability to serve its clients. And the situation got messy as everyone expected.
A lot of crypto firms are facing liquidity issues in the aftermath of the FTX collapse. Among them, crypto lender BlockFi is preparing to file for a chapter 11 bankruptcy and axing up jobs. They have already halted withdrawals and deposits for customers.
