NewsBusiness

Genesis Suspending Client Withdrawals for Lending Arm Citing 'FTX Impact'

After a volatile week amid the collapse of FTX, crypto prime broker Genesis announced that it would pause withdrawals from its lending arm. 

2 min read
Genesis Trading is a crypto prime broker. Image: Shutterstock.

On Wednesday morning, Genesis announced to clients that it would pause withdrawals from its lending arm, citing "unprecedented market turmoil" due to the now-bankrupt crypto exchange FTX.

"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 business," the firm wrote.

Genesis reported $12.5 billion active loans outstanding and processed over $130.6 billion loans in 2021.

The news comes amid the collapse of crypto exchange FTX, of which Genesis' derivatives trading arm also revealed roughly $175 million in exposure.

"Our operating capital and net positions in FTX are not material to our business. Circumstances surrounding FTX have not impeded the full functioning of our trading franchise," the firm tweeted on November 10.

A day later, the crypto broker's parent company Digital Currency Group (DCG) said that it would be stepping in to provide Genesis with $140 million in equity. Following today's news, DCG said that Genesis' "temporary action has no impact on the business operations of DCG and our other wholly owned subsidiaries."

Genesis did not respond immediately to Decrypt's request for comment.

The move is just the latest fallout from the FTX contagion. Once a starlet of the crypto bull run, the crypto exchange filed for Chapter 11 bankruptcy last Friday. There are reportedly over one million creditors that have been listed in the filing.

Genesis joins a fast-growing list of affected firms.

This week alone, Liquid Global and SALT both halted withdrawals on their platforms. BlockFi, another popular crypto lender, is now mulling bankruptcy after suffering "significant exposure to FTX."

Stay on top of crypto news, get daily updates in your inbox.