Genesis Global Trading’s lending division has temporarily halted withdrawals and new loan issuances following the collapse of FTX, interim CEO Derar Islim informed clients on a Wednesday call. According to the business’s website, at the end of the third quarter of 2022, Genesis Global Capital had originated active loans worth $2.8 billion, all of which were used to service the company’s institutional client base.
The FTX Avalanche
Genesis is one of the largest crypto lenders, generating $131bn in loans in the past year alone. It was severely harmed by the fall of Three Arrows, a Singapore crypto hedge fund that declared bankruptcy in July after its bets on bitcoin and other cryptocurrencies went sour. According to the evidence presented in court, Genesis had extended $2.4 billion to Three Arrows in unsecured loans.
However, the recent collapse of Sam Bankman-$32 Fried’s billion cryptocurrency exchange and its subsidiary trading company Alameda Research has sent shockwaves throughout the sector, prompting rival exchanges and lenders to seek to ease worries of proliferation.
Genesis said it had recruited “the best advisers in the industry to explore all possible options” and will submit a strategy for the lending business next week. “We’re working tirelessly to identify the best solutions for the lending business, including, among other things, sourcing new liquidity,” the firm stated.
It was also noted that the group’s trading and custody offerings had not been affected. The trading division was “separate from all other Genesis entities,” stating it had its own capital and administration.
Genesis’ parent firm, Digital Currency Group, headed by billionaire Barry Silbert, stated there was “no impact on the business operations of DCG and our other wholly owned subsidiaries.” on business operations.
More businesses bite the dust
It was not just Genesis that felt the FTX impact. A week before, troubled crypto lender BlockFi announced via Twitter that it would be suspending commercial operations due to “a lack of clarity” over the future of FTX.com, FTX, and Alameda Research. The firm has said that it would suspend withdrawals and limit platform activity. Currently, BlockFi is requesting that its clients refrain from making any deposits.
