The crypto market has taken a hit once again, this time because of Genesis Global Capital pausing withdrawals over liquidity problems. This prompted the top two cryptocurrencies to take a significant fall.
At the time of writing this article, Bitcoin was down by 2.69% in the last 24 hours trading at $16,480, while Ether lost 4.86% holding at $1,199. Much of the altcoins are splashing red. Polygon is down 6.63%, Polkadot 5.28%, Cardano 4.14%, and Ripple’s XRP 2.45%.
Derar Islim, Genesis Interim CEO, told customers that the company is exploring solutions for the lending unit, including finding a source of fresh liquidity. He revealed that Genesis will detail its plan to clients next week. The company took to Twitter to inform its users that Genesis Trading’s lending business Genesis Global Capital made the difficult decision to temporarily halt redemptions and new loan originations. The company’s decision was driven by the extreme market dislocation and loss of industry confidence brought in by the FTX implosion.
Amanda Cowie, vice president of communications and marketing at Digital Currency Group (DCG) – the parent company of Genesis, said other operations were unaffected, including Grayscale and Grayscale Bitcoin Trust (GBTC). The lending business sustained a hit, but Genesis’s trading or custody businesses have not been impacted. The company assured customers that this temporary action has no impact on the business operations of DCG and its other wholly-owned subsidiaries.
Grayscale on its part said assets underlying $GBTC and all Grayscale products remain safe and secure, held in segregated wallets in deep cold storage by Coinbase. Genesis’s problem began with the Terra and LUNA debacle and the insolvency of Three Arrows Capital (3AC). As such, Genesis has been de-risking the book and shoring up its liquidity profile.