Crypto crisis escalates as lender Genesis suspends withdrawals
ONE of the world’s biggest cryptocurrency lending companies has halted withdrawals as the fallout of the $32bn (£27bn) collapse of digital coin exchange FTX spreads.
Genesis Global Capital, a cryptocurrency company with $2.8bn in digital asset loans on its books, said it had suspended loan redemptions amid the “loss of industry confidence caused by the FTX implosion”.
The decision also hit the cryptocurrency exchange Gemini, which was founded by the billionaire Winklevoss twins – rivals of Mark Zuckerberg at Harvard University. The exchange offered a lending product using Genesis, which now faces withdrawal delays.
Digital Currency Group, the parent company of Genesis, said: “This temporary
‘This temporary action has no impact on the business operations of DCG and our other subsidiaries’
action has no impact on the business operations of DCG and our other wholly owned subsidiaries.”
British crypto company B2C2 told The Daily Telegraph it had held preliminary talks with Genesis about buying part of its loan book to ease the crisis.
Maxime Boonen, founder of B2C2, which is owned by £5bn Japanese bank SBI, said: “We have spoken to them. It is preliminary. Genesis faces something that looks like a liquidity crunch.”
The suspension of withdrawals at Genesis followed reports in The Wall Street Journal that cryptocurrency exchange Blockfi was exploring possible bankruptcy after itself suspending withdrawals. The growing market panic follows the collapse of digital coin exchange FTX, which filed for bankruptcy in the US last week along with 130 subsidiary companies.
FTX, which just months ago had been valued at $32bn, imploded on the back of a series of risky investments and a surge in withdrawals.
Based in the Bahamas and founded by Sam Bankman-fried, FTX reportedly used customer funds to drive billions of pounds in trades at its sister hedge fund, Alameda Research.
It collapsed with $9bn in liabilities and just $900m in liquid assets. The collapse has left as many as one million creditors out of pocket, according to bankruptcy documents.