Genesis Global halts withdrawals citing ‘unprecedented market turmoil’
The troubled firm is also acting as the liquidity provider of Grayscale Bitcoin Investment Trust. 2674 Total views 41 Total shares Listen to article 0:00 News According to a new tweet by Genesis Global on Nov. 16, the institutional crypto lender said it would temporarily suspend redemptions and new loan originations in the lending business. In explaining the decision, the firm cited unprecedented market turmoil related to the collapse of troubled cryptocurrency exchange FTX, resulting in abnormal levels of withdrawals that Genesis Global claims to have exceeded its current liquidity.
The firm also added that its current liquidity was negatively impacted by the collapse of hedge fund Three Arrows Capital in June. As part of bankruptcy proceedings, the brokerage has filed a $1.2-billion claim against Three Arrows Capital.
Though its unclear what the firms liquidity levels are, Cointelegraph previously reported that Genesis Global had $175 million worth of funds stuck on FTX. In response, Digital Currency Group, the parent company of Genesis Global, sent its subsidiary an emergency $140-million equity infusion to cover losses.
Its now apparent that the transfer was insufficient to meet consumer withdrawal demands. As for the next steps, Genesis Global stated: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. Were working tirelessly to identify the best solutions for the lending business, including among other things, sourcing new liquidity.
Genesis Global also claimed that its spot, derivatives trading and custody businesses remain fully operational. In its latest quarterly report, the firm stated that it has $2.8 billion worth of active loans. Since the announcement, its parent company, Digital Currency Group, has clarified that it has no impact on its own operations. However, Genesis Global currently serves as the liquidity provider of the popular $6.7-billion Grayscale Bitcoin Investment Trust (GBTC). The fund is currently trading at a discount of nearly 40% to its net asset value at the time of publication in part due to investor speculation on its exposure to Genesis Global.
Update 2:35 PM UTC: Cryptocurrency exchange Gemini confirms Genesis Global is the lending partner for its Earn program and will not be able to meet customer redemptions within five business days. Gemini also states that the event does not affect the firms other products and services and that all customer funds held on the Gemini exchange are held 1:1 and available for withdrawal at any time.
Update 2:40 PM UTC: GBTC released a statement saying that “all Grayscale products remain safe and secure, held in segregated wallets in deep cold storage by our custodian @Coinbase.” The company also claimed its digital asset products are unaffected, and that the firm does not borrow nor lend with custodied assets. #Blockchain #Cryptocurrencies #Business #Grayscale Related News How do you assess the value of an NFT? 27,000 requests last year: Collaboration key for Binances Investigations team Charities risk losing a generation of donors if they dont accept crypto Binance CEO urges crypto buyers to hold amid unpredictableness FTX collapse could see crypto sector layoffs accelerate
