Genesis suspends redemptions at loan business amid crypto fallout

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Crypto broker moves to protect unit after collapse of major exchange FTX

Crypto broker Genesis Global Capital is suspending redemptions and new loan originations at its lending business, it said on Wednesday, in the latest sign of the industry fallout from last week’s collapse of major crypto exchange FTX.

Genesis’ parent Digital Currency Group , an investor that also owns crypto asset manager Grayscale, said on Twitter 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”. “Grayscale does not borrow, lend, rehypothecate, or otherwise encumber the products’ underlying assets, and the custodian for the assets is prohibited from engaging in such activity,” it said.Joseph Edwards, investment partner at Securitize Capital said: “This shouldn’t be seen as a step up, but rather as a step outwards, given that Genesis have a number of significant regulated counterparties — there will be discomfort being felt among OTC desks in Europe and North America in particular.

The proposed class action filed late on Tuesday in Miami alleges that FTX yield-bearing accounts were unregistered securities that were unlawfully sold in the US.

 

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Business Maverick: FTX Latest: Contagion Spreads to Genesis, Winklevosses’ GeminiCrypto brokerage Genesis is suspending redemptions at its lending business after facing what it described as “abnormal withdrawal requests” in the aftermath of the collapse of FTX. Genesis’ lenders include Gemini Trust Co., the cryptocurrency platform run by the Winklevoss brothers. Gemini said it has paused withdrawals on its lending program.
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