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Crypto Contagion: Genesis, Gemini, And BlockFi All Entangled In FTX Collapse

Author

John Asher

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Reading time

2 mins
Last update

Author

John Asher

Tags

Reading time

2 mins
Last update

Author

John Asher

Tags

Reading time

2 mins
Last update

FTX

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The FTX contagion continued to spread as other crypto companies announced changes to their operations, including paused withdrawals, halting new loan originations, and redemptions. Unfortunately, a cryptocurrency lender is also on the brink of bankruptcy.

Genesis: Suspended Customer Withdrawals And New Loan Originations

On November 16, the lending arm of cryptocurrency investment bank Genesis Global Trading, Genesis Global Capital, LLC (Genesis), suspended new loan originations and redemptions as disclosed in their Twitter account. According to the company’s website, it had $2.8 billion in total active loans at the end of the third quarter of 2022. Genesis is looking into solutions for the lending unit, including finding a source of fresh liquidity and proposes to share its plan with clients next week.

Genesis, which is owned by Digital Currency Group (DCG), also owns CoinDesk. CoinDesk was the first to report on FTX’s poor financial health. A leaked balance sheet from Alameda Research, a trading firm founded by Sam Bankman-Fried (SBF), alleges billions of dollars worth of Alameda’s assets are tied up in FTX’s token.

Genesis had $175 million in assets locked on the failed exchange, FTX. In order to strengthen the balance sheet, DCG provided Genesis with an equity infusion of $140 million.

Gemini: Paused Withdrawals On Lending Program

In addition, Gemini, a crypto exchange, announced that customer withdrawals from its yield-generating product were paused as a result of Genesis’ changes. Gemini will not meet its redemption service-level-agreement period of five business days. Genesis is a key lending partner for that program.

The announcement highlighted that the other sides of Gemini’s business remain unaffected including the Gemini Staking, which is part of their Grow offering product and separates from the Earn product.

BlockFi: Bankruptcy Is Right Around The Corner

As previously reported BlockFi was also affected by the FTX contagion. The lender suspended withdrawals last week due to FTX’s liquidity issues. BlockFi acknowledged that they have significant exposure to FTX and its associated corporate entities that include obligations owed by Alameda. In addition, they also have assets held on the platform and an undrawn line of credit from FTX. A recent update from Bloomberg report, BlockFi is now preparing to file for bankruptcy within days.

According to an updated bankruptcy filing, FTX may have more than 1 million creditors, hinting at the large impact of its collapse on the crypto industry.