Genesis’ Crypto-Lending Unit Halts Withdrawals after FTX Collapse

Genesis’ Crypto-Lending Unit Halts Withdrawals after FTX Collapse

• Genesis Global Trading discontinues withdrawals and new loan issuing.
• The firm’s spot, futures trading, and custody division are unaffected.
• Investors are reconsidering investing in units like Genesis Global Trading.

On Wednesday, Interim CEO Derar Islim told customers that the lending unit of crypto investment bank Genesis Global Trading is temporarily discontinuing withdrawals and new loan issuing in the wake of FTX’s collapse.

According to a tweet from the company, Genesis Global Capital, the crypto lending division of Genesis Global Trading, has stopped redeeming existing loans and issuing new ones.

We recognize how challenging this past week has been due to the impact of the FTX news. At Genesis we are entirely focused on doing everything we can to serve our clients and navigate this difficult market environment.

— Genesis (@GenesisTrading) November 16, 2022

The tweet states that the firm’s spot, futures trading, and custody division are unaffected.

According to the company’s website, the Genesis Global Capital unit catered to institutional consumers and had $2.8 billion in total active loans by the end of the third quarter of 2022.

Genesis revealed last week that the $175 million in locked funds in its FTX trading account belonged to its derivatives unit. Instead, DCG injected $140 million in additional shares to bolster Genesis’ balance sheet.

Gemini, the cryptocurrency exchange and custodian that collaborates with Genesis, took notice of the development.

The news of the FTX collapse comes after a tumultuous week for the market. The crypto lending unit of Genesis Global Trading may have been adversely affected by this turmoil, but customers should not worry as the company’s other operations continue unaffected.

The sequence of volatile actions in the market has made investors skeptical of cryptos. Recently, several reports have been of whales dumping their holdings, and the market has taken a nosedive in response.

This week’s events may have caused some investors to reconsider investing in crypto lending units like Genesis Global Trading.

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