Genesis Global Suspends Withdrawals Due to the Market Turmoil

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.

Our #1 priority is to serve our clients and preserve their assets. Therefore, in consultation with our professional financial advisors and counsel, we have taken the difficult decision to temporarily suspend redemptions and new loan originations in the lending business.

— Genesis (@GenesisTrading) November 16, 2022

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.

As part of our goal in providing transparency around this week’s market events, the Genesis derivatives business currently has ~$175M in locked funds in our FTX trading account. This does not impact our market-making activities.

— Genesis (@GenesisTrading) November 10, 2022

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.

We have hired the best advisors in the industry to explore all possible options. Next week, we will deliver a plan for the lending business. We’re working tirelessly to identify the best solutions for the lending business, including among other things, sourcing new liquidity.

— Genesis (@GenesisTrading) November 16, 2022

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. 

1/6 We are aware that Genesis Global Capital, LLC (Genesis) — the lending partner of the Earn program — has paused withdrawals and will not be able to meet customer redemptions within the service-level agreement (SLA) of 5 business days. https://t.co/9e48pF3Ymn

— Gemini (@Gemini) November 16, 2022

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.