Genesis Global Capital suspends crypto-lending operations

The cryptocurrency OTC platform Genesis Global Capital has frozen withdrawals and the issuance of new loans. This followed heightened withdrawal requests from clients in the wake of the FTX collapse.

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. We’re working tirelessly to identify the best solutions for the lending business, including among other things, sourcing new liquidity.

— Genesis (@GenesisTrading) November 16, 2022

The changes did not affect spot and derivatives trading, nor custodial services, which remain fully operational.

The BitLicense-holder broker-dealer Genesis Global Trading is an operationally independent unit, which also continues to function normally and fulfill its obligations, the company said.

«Default of Three Arrows Capital (3AC) negatively affected Genesis Global Capital’s liquidity and duration metrics for the portfolio. Since then we have been reducing portfolio risk and strengthening our liquidity profile and the quality of our collateral. FTX problems caused unprecedented market turmoil. They led to heightened withdrawal requests that exceeded our current liquidity», — the company explained.

Next week the firm will present a plan to restore its lending business after reviewing with hired advisers all possible options, including raising new financing.

The volume of loans issued by Genesis Global Capital declined from $44.3 billion in January–March to $8.4 billion in Q3 2022. Acting CEO of Capital, Deraru Islimu, disclosed this in an interview with Bloomberg.

As of the end of Q3, the outstanding loan balance stood at $2.8 billion, according to the company’s website.

The company raised $140 million from its parent Digital Currency Group after disclosures of the blocking of $175 million of the derivatives unit’s funds on FTX accounts.

Genesis Global Capital’s troubles have caused problems for Gemini’s Earn program. Gemini’s management is making efforts to resolve them. Platform representatives said this does not affect any other products or services.

In July it emerged that 3AC owed Genesis Global Capital $2.36 billion. Its parent Digital Currency Group provided support by taking on certain obligations. The firm was the hedge fund’s largest creditor.

In August, Genesis Global Capital chief Michael Moro left the company after seven years, including six as CEO. Along with him, one in five platform employees were laid off.

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