Investors are concerned that those losses could pile up. Earlier this year, a shortfall of collateral forced some lenders - and their customers - to shoulder large losses. But unlike traditional banks, they are not required to hold capital cushions. Those products pay yield to customers who deposit certain cryptocurrencies on the platforms.Ĭrypto lenders, who acted as the de facto banks of the crypto world, boomed during the pandemic. While it does not directly serve individual investors, Genesis is an important lender that backs products offered by crypto companies such as Circle Internet Financial, the principal operator of one of the largest stablecoins, USD Coin, and by Gemini. Genesis' parent, DCG, filed a claim for $1.2 billion against Three Arrows. Genesis had loaned more than $2.3 billion to Three Arrows, according to a July court filing. The lender is also embroiled in legal proceedings. Genesis also said it had 'no material exposure' to FTX's native digital token or those of other crypto exchanges, and had hedged its positions on holdings linked to FTX. While Genesis declined to comment on the Journal report, a spokesperson said it had 'massively reduced' its exposure to Alameda after the collapse of Three Arrows. Two days earlier, it had sought an emergency loan of $1 billion from investors, the Wall Street Journal reported. Genesis received 'abnormal withdrawal requests' from customers that exceeded its liabilities on Wednesday, the company said. 'It's a signal of worse outcomes' for the crypto market, particularly since Genesis also deals with brokers, family offices and money managers. 'There has been a target on Genesis's back for days,' said Joseph Edwards, an investment partner at Securitize Capital. Genesis' two biggest borrowers, according to a person familiar with the matter, were Three Arrows Capital, a Singapore-based crypto hedge fund, and Alameda Research, a trading company closely affiliated with FTX. The contagion concerns stem from Genesis' prominence in crypto, its links to troubled firms and broader reach into the financial world.

Genesis is owned by Stamford, Connecticut-based venture capital company Digital Currency Group. On Wednesday, its crypto lending arm stopped making new loans and blocked customers from taking out money because of what it called 'unprecedented market turmoil' that rippled through the market after FTX filed for bankruptcy last week. Genesis, which brokers digital assets for financial institutions like hedge funds and asset managers, had almost $3 billion in total active loans at the end of the third quarter. Nov 18 (Reuters) - The uncertain future of Genesis Global Capital, one of the biggest crypto lenders, is fueling concern that the recent collapse of crytpo exchange FTX is having a spillover effect on other players in the highly interconnected market.

Genesis by Anonymous