Like many in the industry, Genesis’s financial health has been closely watched as an indicator of industry strength or for signs of possible contagion. Some of the largest Genesis lenders include the Gemini cryptocurrency exchange, which offers a product for users to generate returns through Genesis, according to its website. On Wednesday, Gemini announced that it is working with Genesis to help customers withdraw their funds from the Earn product “as quickly as possible.”
FTX’s sudden bankruptcy is spreading across cryptocurrency markets, scaring off clients rushing to withdraw their assets from other platforms. Also at risk are troubled cryptocurrency lenders like BlockFi and Voyager Digital, which has been forced to try to find a new buyer for its assets to replace FTX. Investors like crypto asset hedge fund Galois Capital, which reported “significant” funds stuck on the FTX platform, are also feeling the pinch. Even miners have been affected, as the fall in cryptocurrency prices caused by the FTX crash has also put pressure on earnings.
Last week, Genesis said it would get a $140 million capital injection from its parent company, Barry Silbert’s Digital Currency Group, after revealing that its derivatives business had $175 million in funds locked up in a trading account. from FTX. The lending business had previously been hit by its exposure to failing cryptocurrency hedge fund Three Arrows Capital, to which it had made a $2.4 billion loan.
Genesis is one of the oldest and most well-known cryptocurrency brokers, offering trading and custody services to professional investors in digital assets. In recent years it had also established itself as one of the largest cryptocurrency lenders, allowing funds or other market makers to borrow dollars or virtual currencies to leverage their operations.