Genesis’ Lending Arm Halted Withdrawals After Failing To Raise $1B
- Genesis said the 3AC debt “negatively impacted” the liquidity of its lending arm.
- The firm said it will have to halt withdrawals from its lending arm on Wednesday.
According to a report by WSJ, cryptocurrency lender Genesis attempted to obtain a $1 billion loan from investors to prevent a liquidity constraint caused by the impact of the bankruptcy of cryptocurrency exchange FTX. Genesis required the credit by Monday at 10 am EST.
Because of “abnormal withdrawal requests which have exceeded our current liquidity,” Genesis said it will have to halt withdrawals from its lending arm on Wednesday morning, citing the collapse of FTX as the reason.
The document noted:
“There is an ongoing run on deposits driven mainly by retail programs and partners of Genesis (i.e., Gemini Earn) and institutional clients testing liquidity.”
Multiple Hits in a Year
Following the tweet, the firm clarified that its trading and custody operations were still “fully operational.” And that Genesis Global Trading, the SEC-registered broker-dealer that has Genesis’ virtual currency license, is “independently capitalized and operated.”
However, the bank also tweeted that it had $175 million in frozen money on its FTX account for its derivatives business. Albeit it maintained that this would not affect its market-making operations. Three Arrows Capital (3AC) collapsed earlier this year, leaving Genesis reeling from the $2.3 billion in debt owed by the ex-crypto hedge fund. Genesis said the debt “negatively impacted” the liquidity of its lending arm.
Genesis is the latest cryptocurrency company to feel the effects of the recent collapse of cryptocurrency exchange FTX. It was revealed last week that the firm formed by Sam Bankman-Fried owes money to more than a million creditors, prompting the company to apply for Chapter 11 bankruptcy protection last week.
Recommended For You: