Institutional cryptocurrency lender Genesis Global has had to halt all withdrawals.
Liquidity problems
According to the company, the unprecedented market turmoil can be directly linked to the collapse of the crypto exchange FTX. This, in turn, would result in abnormal withdrawal levels at several parties, which Genesis Global now claims exceed current liquidity levels.
This liquidity would also have been negatively affected by the collapse of the hedge fund ‘Three Arrows Capital’ last June. While it’s not exactly clear what the company’s liquidity levels are, it was known that Genesis Global had approximately $175 million in cash on FTX.
According to Genesis Global’s parent company, the Digital Currency Group, its subsidiary needs an emergency equity injection of $140 million to cover all losses incurred.
All possible options are being explored
As to what the next steps will be for the company, Genesis Global stated the following:
We have hired the best consultants in the industry to map out all possible options. Next week we will provide a plan for lending. We work tirelessly to find the best lending solutions, including sourcing new liquidity.
It is worth noting that all of Genesis Global’s spot, derivatives trading and custody operations currently remain fully operational. The company has approximately $2.8 billion in active loans, according to its latest quarterly report.