What’s Happening with Genesis Trading?
Genesis Trading es una de las mundoes más grande cripto trading desks for professional investors, primarily offering Bitcoin over-the-counter (OTC) trades and lending services. Recently, Genesis has temporarily suspended redemptions and new loan originations due to abnormal withdrawal requests in the aftermath of the collapse of FTX.
Our #1 priority is to serve our clients and preserve their assets. Therefore, 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 la administración de empresas..
— Génesis (@GenesisTrading) 16 de noviembre.
Genesis dijo that the withdrawal requests have exceeded its current liquidity, which raised concerns about the firm going insolvente. Because Genesis is directly affiliated with some of the largest cripto institutions, its fall could start another domino effect that is even more devastating than the FTX contagion.
In case you are out of the loop, we have covered the entire timeline of the FTX contagion in chronological order listed down below:
Fallback of Genesis Trading from Three Arrows Capital
The lack of liquidity Genesis is undergoing is not only because of FTX. It is largely attributed to the fall of Three Arrows Capital (3AC) in the aftermath of the Terra Luna collapse.
Genesis was the biggest creditor to 3AC, lending 2.4 millones de dólares. After 3AC went bankrupt, Genesis filed a Reclamo de $ 1.2 mil millones against them. When 3AC failed to provide the required collateral, the parent company of Genesis, Grupo de moneda digital (DCG), stepped in and assumed the $1.2 billion claim, leaving Genesis with no outstanding liabilities to 3AC.
By Q3 2022, their market activity drastically fell, with loan originations falling from $50 billion in Q4 2021 to a mere $8.4 billion. Despite the situation, institutional investors still believe they were cripto’s safest counter-party.
Gemini’s Exposure to Genesis Trading
Gemini, one of the top crypto exchanges regulated in the U.S., anunció that there would be withdrawal delays with its Gana producto, in which Genesis is a lending partner. If you do not know how Genesis ties into Gemini Earn, here’s how it basically works:
After the lenders give their crypto to Gemini, it will be given to Genesis for them to lend out to a fund. The borrowing party will pay fees for this, which will be shared between Gemini and the lenders. The problem now is that Genesis is having liquidity issues, thus they are unable to give Gemini back their crypto. This means that lenders on Gemini Earn cannot get their crypto back.
Aunque Géminis asegura this does not impact any other products and services, Gemini customers are rushing to get their fondos out fearing the exchange is next to go down as the FTX contagion spreads. Over the past 24 hours at the time of writing, Gemini has seen 570 millones de dólares in withdrawals and ETH withdrawals reached an su punto más alto en el intercambio
Genesis Trading’s Impact on the Crypto Market
It is not just Gemini but also many other CeFi platforms and major hedge fondos use Genesis for their yield product. Moreover, many crypto whales opt to give their funds directly to Genesis to earn yields as well as custodial services. If Genesis is unable to give them back their crypto, many lenders worldwide could potentially lose their asset.
Genesis is also a sister company of Escala de grises, la mundo’s largest Bitcoin fund (GBTC) and one of the largest Bitcoin holders worth $11 billion at the time of writing. If Grayscale is affected by this, there is a possibility that Grayscale will dissolve GBTC to pay back lenders. This impact of this could be huge.
However, Grayscale assured users that Genesis is not a counterparty or service provider for any Grayscale product, which means they will not be affected by Genesis suspending withdrawals. But in light of recent situations where FTX and Alameda claimed that they are two independent entities, sceptics are demanding a full audit to prove customer fondos estan seguros.
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