Genesis Trading Suspends Withdrawals at the Lending Unit

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Last Updated on November 18, 2022 by Bitfinsider

Genesis Trading has halted withdrawals at its lending section, citing the “extraordinary market turbulence” caused by the collapse of Sam Bankman-FTX Fried’s as the reason.

Genesis, a significant player in the digital asset fixed income markets, has suspended redemptions and new loan originations due to “abnormal withdrawal requests that surpassed our present liquidity.”

The issues at Genesis are the most recent indication that the collapse of Bankman-FTX Fried’s crypto exchange and Alameda Research, his trading firm, is sending shockwaves across the cryptocurrency market. The US House of Representatives Financial Services Committee announced a hearing on FTX’s demise and its influence on the cryptocurrency market on Wednesday.

Genesis, situated in New York, allows clients to lend out their coins in exchange for rates of up to 10 percent, while also providing comparable services for organizations such as Gemini, an exchanges operator controlled by Tyler and Cameron Winklevoss. Genesis also provides digital coin loans to institutions including hedge funds and family offices.

According to its website, Genesis had $2.8bn in “active loans” at the end of the third quarter of 2022. In 2021, it originated $131 billion in loans.

Its parent business, Digital Currency Group, which is owned by billionaire Barry Silbert, stated that the withdrawals were suspended “in response to the extreme market dislocation and loss of industry confidence induced by the FTX meltdown.”

Concerns have also been raised concerning its business partners due to the ban. Wednesday, Gemini stated that it was “informed” of the issues impacting Genesis.

Gemini and Genesis have collaborated on a platform that pays consumers interest for lending out crypto assets. Genesis is the principal lender.

Gemini stated, “We are working with the Genesis team to help consumers redeem their monies as soon as possible.”

Another Genesis partner, the cryptocurrency platform Luno, stated that its users’ assets were secure and that it had “taken efforts” to ensure that consumers could access their accounts “in the event that Genesis withdrawals are not feasible.”

Genesis stated that it has hired “the greatest advisors in the field to study all viable options” and that it will present a plan for the lending business the following week. It stated that it was “working relentlessly” to remedy problems, which included “finding new liquidity.”

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