February 8, 2023

Genesis Crypto Brokerage Stops Accepting Withdrawals from Its Lending Arm

Redeeming loans and making new ones have both been put on hold by Genesis’ lending firm. This occurred due to “abnormal withdrawal demands” after FTX’s demise. Derar Islim now serves as Genesis’ acting CEO. Islim claims that the withdrawal requests from Genesis Global Capital exceeded the company’s available cash.

Genesis Is Considering All Its Options

According to Islim, Genesis will provide a plan for its lending firm the following week. Genesis, a company based in New York, has hired specialists to research all of the options. The purchase of fresh funds is one of these options.

Islim claimed that the move would impact only the lending firm. According to him, Genesis’ spot and futures trading, custody, and related businesses “are fully operational.”

The sudden bankruptcy of FTX is profoundly impacting the cryptocurrency markets. Users are already scrambling to remove their assets from other platforms out of concern.

In addition, Genesis’s financial health is routinely tracked to look for signs of contagion. This is because of the company’s status as a counterparty to many other businesses.

Genesis is a well-established name in the world of cryptocurrency trading. The company caters to institutional investors in digital assets by offering trading and custody services.

One of the earliest cryptocurrency brokers was Genesis. By letting hedge funds and market makers borrow fiat or cryptocurrencies to increase their trades, it quickly became a leading cryptocurrency lender.

A Hard Patch Has Hit the Crypto Brokerage Firm

Total loans issued by the crypto brokerage decreased to $8.4 billion in the third quarter. This decreased from $44.3 billion in the year’s first quarter. This suggests that this year has experienced a considerable fall in its lending arm.

Genesis said that its parent firm would give it a $140 million equity infusion last week. Digital Currency Group, owned by Barry Silbert, is the parent company of Genesis. This came about when discoveries showed that the company’s derivatives division had $175 million locked up in an FTX trading account.

The collapse of Three Arrows Capital hurt the lending company. Three Arrows Capital had received a $2.4 billion loan from Genesis.

According to court documents, three Arrows provided half the required amount of cash for the loan. Su Zhu and Kyle Davies were in charge of running the bankrupt hedge fund. Digital Currency Group (DCG) is now the collapsed hedge fund’s biggest creditor after assuming all outstanding obligations.

Senior executives have left Genesis in substantial numbers throughout this year. Additionally, the business has been laying off employees. Twenty percent of the company’s employees were let go in August.

Islim was appointed as the temporary CEO during the downsizing, which affected 260 individuals. Michael Moro was replaced in the position by Islim.

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