Yahoo Finance Crypto broker Genesis suspends withdrawals cites FTX fallout
Crypto broker Genesis announced to clients that it is suspending client withdrawals from its lending arm, citing "unprecedented market turmoil" following the demise of crypto exchange FTX.
The current suspension of withdrawals is currently restricted to the firm's lending arm.
Genesis' derivatives trading arm has revealed roughly $175 million in exposure to collapsed crypto exchange FTX.
On Wednesday, the popular cryptocurrency broker stated: "In consultation with our professional financial advisors and counsel, we have taken the difficult decision to temporarily suspend redemptions and new loan originations in the lending business."
Furthermore, our operating capital and net positions in FTX are not material to our business. Circumstances surrounding FTX have not impeded the full functioning of our trading franchise.
— Genesis (@GenesisTrading) November 10, 2022
Genesis added: "Genesis’s spot and derivatives trading and custody businesses remain fully operational. We continue to support our clients who rely on us during volatile market conditions to manage their risk and execute on their business strategies."
Read more: BlockFi preps for potential bankruptcy as FTX contagion spreads, report claims
The web of entanglement in crypto is showing signs of stress as FTX was one of the most connected and prominent forces in the industry.
Now, Genesis' parent Digital Currency Group, an investment firm that also owns crypto asset manager Grayscale, took to Twitter to explain the pause in withdrawals.
On Twitter DCG said that the decision to suspend redemptions "was made in response to the extreme market dislocation and loss of industry confidence caused by the FTX implosion".
However, the firm added: "The impact lies with the lending business at Genesis and does not affect Genesis’s trading or custody businesses. Importantly, this temporary action has no impact on the business operations of DCG and our other wholly-owned subsidiaries"
The current suspensions at both Genesis and crypto-lender BlockFi come after the FTX exchange filed for Chapter 11 bankruptcy last Friday. There are reportedly over one million creditors listed in the bankruptcy filing.
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