According to some reports, the cryptocurrency lender Genesis attempted to get a $1 billion loan from investors in order to avoid a “liquidity crisis” brought on by the effects of the bankruptcy of the FTX crypto exchange.
The company claimed to get the money by Monday 10 am, but it didn’t. Genesis subsequently made the decision to halt withdrawals from its lending platform on Wednesday morning, attributing the decision to the fall of FTX and “abnormal withdrawal demands which have surpassed our present liquidity.”
“There is an ongoing run on deposits driven mainly by retail programs and partners of Genesis and institutional clients testing liquidity,” the document stated.
The company claimed Genesis Global Trading, the broker-dealer that is registered with the SEC, is in possession of Genesis’ virtual currency license, that the company is “independently financed and operated,” and that its trading and custody operations are still “fully operational.”
Moreover, the lender tweeted that $175 million in funds were locked in its FTX account for its derivatives business, but it claimed that this would not impact its market-making activities.
The collapse of Three Arrows Capital (3AC) earlier this year has left Genesis in a state of shock. According to the company, the $2.3 billion debt owed by the former cryptocurrency hedge fund “negatively impacted” the lending arm’s liquidity.
Genesis has now been added to the expanding list of cryptocurrency companies affected by the closure of FTX earlier this month.
Sam Bankman-Fried’s company filed for Chapter 11 bankruptcy last week. The company owes money to over one million investors.