Genesis Stops Crypto Lending, Blaming “FTX Implosion”

Customer redemptions and new loan originations have been stopped by the lending division of cryptocurrency asset manager Genesis, a move that has already disrupted ecosystem-wide crypto services.

The decision was made as a result of the growing effects of FTX’s failure. Wider exchange liquidity problems that were caused by big-money traders’ hasty decision to remove their digital assets from exchanges in favor of secure cold-storage solutions set off the ripple effect.

FTX contagion is spreading to the crypto credit markets and has already hit Genesis, one of their biggest operators.

The New York-based firm’s number one priority is to “serve our clients and preserve their assets.”

“Therefore, we have taken the difficult decision to temporarily suspend redemptions and new loan originations in the lending business. We are working diligently to shore up the necessary liquidity to meet our lending client obligations.”

The custody and trading arms of Genesis have not been impacted, according to a series of tweets posted Wednesday morning by the company’s principal investor, venture capital firm Digital Currency Group (DCG).

Genesis appears to be “working desperately to escape bankruptcy”

However, stopping credit operations has repercussions for the rest of the cryptocurrency industry. For numerous exchanges that offer yield, like Gemini Earn, which promotes interest rates of up to 8.05% on crypto deposits, Genesis offered backend lending operations.

Gemini Earn said immediately after Genesis’ announcement that it will stop processing Earn redemptions going forward and gave no time frame for when they would be enabled again.

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