Genesis Trading’s lending unit halts customer withdrawals

Genesis Global Capital, the lending arm of digital assets platform Genesis Trading, has halted all redemptions as well as loan originations, parent company Digital Currency Group announced on Wednesday morning.

DCG, pointing to the market conditions and the impact being felt across the crypto space following crypto exchange FTX’s collapse, wrote:

 “Today Genesis Global Capital, Genesis Trading’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.”

FTX implosion is impacting crypto firms

Genesis Global Capital is the latest crypto business to announce a pause on customer services after FTX filed for bankruptcy last week. Liquid, a Japan-based cryptocurrency exchange owned by FTX, suspended customer withdrawals this week and urged users not to deposit funds.

BlockFi, which had a credit facility agreement with FTX and is one of the creditors, is also in trouble. The firm had already limited platform activity and halted customer withdrawals. Many more crypto companies could hit the floor in coming days as the extent of just how bad things are becomes clear.

Digital Currency Group, however, suggests its other businesses are unaffected and that the lending division’s halting of redemptions and loan origination is a “temporary action.” The firm added via a Twitter thread:

“The impact lies with the lending business at Genesis and does not affect Genesis’s trading or custody businesses. Importantly, this temporary action has no impact on the business operations of DCG and our other wholly owned subsidiaries.”

Is Genesis Trading insolvent? 

FTX said it was okay only for the mother of all rot to unfold. So did BlockFi and many others, including summer’s big casualties of Celsius and Voyager.

And this turn of events could well be a signal that Genesis Trading is in big trouble.

On 9 November, Genesis said it had “no lending relationship with FTX”, only a trading relationship and that even then, their exposure to the now bankrupt exchange had no impact on the lending platform’s “ability to serve” its customers.

But could the firm be coming to terms with the whole scenario, going back to Three Arrows Capital? Evidently, Genesis Global is unable to handle customer withdrawals.

The post Genesis Trading’s lending unit halts customer withdrawals appeared first on Invezz.