Crypto Liquidity Provider B2C2 Offers to Purchase Loans from Genesis

A well-known cryptocurrency market maker, B2C2, is extending a hand to the struggling crypto lending firm Genesis, after the latter company froze customer withdrawals on Wednesday. 

“B2C2Group wishes to extend an offer to purchase loans from GenesisTrading's book to alleviate the current liquidity shortfall,” tweeted B2C2 founder Max Boonen, minutes after the trading firm’s announcement. Founded in 2015 by Boonen, a former Goldman Sachs trader, B2C2 is a regulated financial services firm based in the United Kingdom.

“I didn't have Genesis on my bingo card,” he added, stressing that the 2008 financial crisis highlighted the need for financial institutions to “support its subsidiaries” to remain “long-term credible.”

“The company is in a position to support the wider market by offering to work with Genesis and their counterparties to novate existing loans at Genesis Global Capital to B2C2,” said a B2C2 spokesperson to Decrypt in an email. The spokesperson clarified that such loans will still need to fall within the market maker’s risk management framework.

“Our risk management processes are rigorous and controlled, which is why our crypto loans book is over-collateralized by a minimum of 115%,” they continued. 

Genesis is the latest major crypto lending firm impacted by the contagious fallout of FTX’s insolvency. Having suspended loan originations in its lending business, the trading desk caused Gemini Earn to slow redemptions due to using Genesis as its lending partner.

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

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 20...

The crypto broker’s parent company, Digital Currency Group, already stepped in to provide $140 million in equity to Genesis last Friday, when FTX officially filed for bankruptcy alongside Alameda Research. Genesis said last Thursday that it held $175 million in exposure to the defunct exchange. 

BlockFi—a retail crypto lender—opted to freeze customer withdrawals in response to the uncertainty surrounding FTX at the time. The company is now mulling a potential bankruptcy filing. 

Meanwhile, cryptocurrency exchange Sino revealed it had “mid-seven figures” of exposure to FTX on Tuesday, while the crypto hedge fund Ikigai confessed to losing a “large majority” of its funds inside of FTX.