Genesis Global Capital, the cryptocurrency lending arm of Genesis Global Trading, has shut down withdrawals amidst the FTX and Alameda Research collapse.
On a Wednesday morning call, Genesis Global Trading interim chief Derar Islim said the firm is “independently capitalized” and remains operational. According to its Q3 report, it had $2.8 billion in active loans.
Here’s how it got to this point in the wake of crypto exchange FTX’s collapse.
November 9, 2022: Genesis announced that it had a total loss of approximately $7 million “across all counterparties, including Alameda [Research].” It emphasized that Genesis had no “material” exposure to FTX’s native token FTT, and no lending relationship with FTX.
It did have a trading relationship with FTX, but insisted it would not have an impact.
We want to provide an update on where things currently stand with our lending business. In anticipation of the extreme market volatility yesterday, we hedged and sold collateral resulting in a total loss of ~$7M across all counterparties, including Alameda.
— Genesis (@GenesisTrading) November 9, 2022
Protos reviewed Alameda’s balance sheet from the end of June as well as the over-the-counter trading wallet we believe is associated with Genesis. This wallet has previously done substantial volume in FTT.
It contained a whopping 30 million FTT on June 11 — then sharply dropped to 300,000 FTT by June 20th. The number of these tokens began to decline until recently, when the wallet was empty of FTT. It contains 19,500 FTT ($36,000) at press time.
The vast majority of these flows seemed to end at an address that is believed to be the Alameda Research FTX deposit address. This suggests that Alameda Research and Genesis had a trading relationship involving large transactions in FTT.
November 10: Genesis announced that its derivatives business had approximately $175 million which was locked on FTX. IT emphasized that this would not affect its activities.
As part of our goal in providing transparency around this week’s market events, the Genesis derivatives business currently has ~$175M in locked funds in our FTX trading account. This does not impact our market-making activities.
— Genesis (@GenesisTrading) November 10, 2022
November 11: Its parent company Digital Currency Group gave a $140 million equity infusion into Genesis, while emphasizing that “the operation of our lending and trading business has not been impacted.”
It appears that Genesis was lying about its business not being impacted.
Genesis halting withdrawals has also caused Gemini Earn, a product of crypto exchange Gemini that relied on Genesis, to follow suit.
Lending platform Ledn, which previously relied on Genesis as a loan partner, has announced that it no longer has a relationship with Genesis, and that it has fully absorbed the impact of its loans to Alameda, as well as the impact of the assets it held on FTX.
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