Genesis Halts Crypto Lending, Blames ‘FTX Implosion’

The move by Genesis does not affect its other business lines, including crypto trading

article-image

Blockworks exclusive art by axel rangel

share

The lending division of cryptoasset manager Genesis has put a halt to customer redemptions and new loan originations, a move that’s already disrupting crypto services across the ecosystem.

The decision stemmed from the building fallout of FTX’s collapse. Reverberations started with broader exchange liquidity issues triggered by a rush by big-money traders taking their digital assets off of exchanges in favor of safer cold-storage solutions.

Now, industry participants told Blockworks, the FTX contagion is spreading to crypto credit markets and hit one of their largest operators — Genesis.

Genesis executives explained the situation to institutional clients on a call Wednesday morning, according to a source familiar with the matter. Another source last week told Blockworks that Genesis was “functionally insolvent.” Sources were granted anonymity to discuss sensitive business dealings.

In a statement to Blockworks, a spokesperson said: “Genesis has three primary business lines: spot and derivatives trading, lending and borrowing, and custody. Our spot and derivatives trading and custody businesses remain fully operational.”

They added that with regards to its lending operations, the New York-based firm’s No. 1 priority is to “serve our clients and preserve their assets.”

“Therefore, we have taken the difficult decision to temporarily suspend redemptions and new loan originations in the lending business. We are working diligently to shore up the necessary liquidity to meet our lending client obligations.”

Venture capital firm Digital Currency Group (DCG), the company’s main backer, wrote in a series of tweets Wednesday morning that the custody and trading arms of Genesis have not been affected.

Loading Tweet..

CoinDesk first the news of the halt to the crypto firm’s credit facilities.

Genesis appears to be “trying at all costs to avoid [bankruptcy],” a source said, which is “admirable, but costly.”

But suspending credit operations is not without consequence for the rest of the crypto space. Genesis provided backend lending operations for many exchange products that offer yield, including Gemini Earn, which advertises up to 8.05% interest paid on crypto deposits. 

Directly following Genesis’ announcement, Gemini Earn said it would cease processing Earn redemptions moving forward, with no timeline for when they’d be reactivated. Gemini said regular crypto withdrawals are unaffected.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research Report Templates.png

Research

ZKPs enable efficient offchain transaction processing and validation, resulting in increased throughput and reduced fees. Solana's ZK Compression leverages ZKPs to minimize onchain storage costs, while Sui's zkLogin streamlines user onboarding by replacing complex key management with familiar OAuth credentials.

article-image

Plus, is Polymarket this cycle’s breakthrough mainstream app?

article-image

The crypto asset manager lowered its planned fee from 0.25% to 0.15%, undercutting its competitors

article-image

Plus, a look at planned ETH ETF fees and how they differ from their BTC counterparts

article-image

North Korea suspected in breach of Indian exchange’s multisig wallet

article-image

Plus, Sanctum’s CLOUD token has officially launched — but not without problems

article-image

It’s not yet clear whether Donald Trump is pumping bitcoin. But an unofficial memecoin is still seeing benefit.