Following the financial turmoil in the cryptocurrency market as a result of the FTX collapse, crypto institutional lender Genesis Global has suspended withdrawals as a result of increased volatility and market instability, according to a release.
The lender emphasized that the latest decision will lead to a temporary suspension of repayments and new loans generated.
After days of staying strong, the firm finally acknowledged the liquidity crisis, explaining that the endless withdrawals on Genesis Global have surpassed its current liquidity.
While the FTX exchange collapse was one of the reasons, the firm added that the collapse of Three Arrows Capital in June was one factor that negatively impacted on its current liquidity. Earlier, the brokerage had filed a $1.2 billion claim against Three Arrows Capital.
It would be recalled that Genesis Global reportedly had $175 million worth of funds in the collapsed FTX exchange. Although it maintained that it does not negatively impact its market activities.
Meanwhile, the firm has stated that it has hired a team of professional advisors that will guide us on the next possible steps. It promises to release a roadmap for the lending business in days to come.
Genesis Global asserted that its spot derivatives trading and custody businesses are fully in operation. It is noteworthy that the crypto lending firm is the liquidity provider for the famous Grayscale Bitcoin Investment Trust (GBTC) with over $6.7 billion investment.
Gemini Crypto Exchange Partly Affected
Given the fact that Genesis Global is the lending partner for Gemini Crypto exchange for its Earn program, the latter has disclosed that it will not be able to process customer redemptions for the next five business days.
Meanwhile, Gemini exchange stated that the outcome of the event does not negatively affect its other products and services as customer funds are intact and withdrawal can be initiated anytime.
In a related development, Grayscale Bitcoin Investment Trust (GBTC) asserted that all Grayscale products are safe and its digital assets are not affected by Genesis Global’s decision.
