Genesis’ $2.8B crypto lending unit halts withdrawals

The crypto lending arm of Genesis Global Trading, which prices itself as the premier institutional digital asset financial services firm, has temporarily suspended the redemption and issuance of new loans.

Genesis announced the developments through a tweet saying:

“We recognize how challenging this past week has been due to the impact of the FTX news. At Genesis we are entirely focused on doing everything we can to serve our clients and navigate this difficult market environment.”

The lending unit, which is known as Genesis Global Capital, had $2.8 billion in active loans according to its 2022 Q3 report.

Impact on Genesis Trading

Genesis Trading, which is Genesis Global Capital’s dealer/broker, is capitalized independently and operates separate from the lending unit.

In a follow up tweet, Genesis said:

“We would like to emphasize that Genesis Global Trading, our broker/dealer that holds our BitLicense, is independently capitalized and operated – and separate from all other Genesis entities.”

It further emphasized that:

“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.”

Taking steps to protect customers amid the FTX crisis

According to Genesis, the default of a loan issued to Three Arrows Capital negatively impacted the “liquidity and duration profiles’ on their lending entity and since then they have been “de-risking the book and shoring up our liquidity profile and the quality of our collateral.”

But there have been abnormal withdrawals exceeding the lending unit’s liquidity due to the market turmoil caused by the FTX crisis thus necessitating the temporary suspension of redemption and new loan origination in the lending business.

Genesis has also said that they are exploring best solutions for the lending business including sourcing new liquidity.