Is Genesis the latest victim of the FTX contagion? Here’s the unsaid truth
- Genesis announced it was pausing its withdrawals but other features running
- A couple of crypto projects have come out to state their exposure or lack of it to Genesis
Another blow has been dealt to the cryptocurrency industry just as it was beginning to recover from the ripple effects of the FTX crash and apparent bankruptcy filing.
This November has been a brutal one for cryptocurrencies, and now Genesis has stated that it would no longer be processing withdrawals. How far does this go and what aspects of Genesis were impacted by this?
Explaining the Genesis
On 16 November, Genesis Global, an institutional crypto lender, announced that it would temporarily halt redemptions and new loan originations. Genesis Global claimed unusual market instability connected to the collapse of the ailing cryptocurrency exchange FTX as the reason for the decision.
This turmoil led to abnormally high withdrawals, which the company alleges depleted its liquidity.
Genesis Global further asserted that all of its businesses, including derivatives trading, custody, and spot trading are running normally. Digital Currency Group, the company’s parent company, had stated, categorically, that the news had no bearing on its own operations since the release.
Gemini and Circle exposed, Tether covered
Well, Gemini, a cryptocurrency exchange, posted on 16 November that there could be withdrawal delays for its Earn product. The Earn product on the cryptocurrency exchange is serviced by Genesis.
This product allows users to earn interest on their idle cryptocurrency deposits. The announcement went on to say that the cryptocurrency exchange was making efforts to return Earn program customer funds as soon as possible. The company also assured customers that the move had no negative effects on any other Gemini offerings.
The Gemini platform’s users appeared to be terrified by the suspension of withdrawals for the Earn program. This may have been made worse by the brief outage that the exchange experienced on 16 November.
Interestingly, on the same day, Tether published a brief statement claiming that the company was not involved with Genesis Global or the Gemini Earn program. This meant there was no USDT on deposit with the institutional lender for the project.
On the other hand, Circle claimed to have exposure to Genesis. In response to the Genesis announcement, the project issued a statement revealing the existence of a product dubbed Circle Yield.
It also mentioned Genesis as a counterparty in Circle Yield, which was described as an overcollateralized fixed-term yield contract. The loans’ total value was listed as $2.6 million by Circle, who added that “robust collateral agreements” had been put in place to safeguard the loans.
There are still rumors of an additional impending collapse connected to the FTX catastrophe. The cryptocurrency industry appears to be on guard at the moment, bracing for the worst. The longest month ever for investors and enterprises could be this November.