Home/ Markets / Cryptocurrency/  Crypto broker Genesis says needs more time to fix financial crisis

Genesis Trading, a crypto broker, on Wednesday revealed that they need more time to fix their financial problems. Genesis halted its withdrawals in November 2022 after the FTX Group announced bankruptcy which shook the entire market. Genesis has been trying to come up with a solution for its troubled lending unit.

Interim Chief Executive Officer Derar Islim wrote in a letter that was seen by Bloomberg News, said, "While we are committed to moving as quickly as possible, this is a very complex process that will take some additional time. We believe we can arrive at a solution."

The interim CEO's note added that Genesis will continue to give you updates on meaningful developments, including any updates on timing.

Due to a liquidity crisis and failed attempts for raising fresh funds, one of the world's largest crypto exchanges, FTX announced voluntary insolvency by filing Chapter 11 in November last year to review and monetize assets for the benefit of all global stakeholders.

This also riled crypto markets with major cryptocurrencies facing sharp selling pressure for a brief period. However, that was not all, FTX's bankruptcy also fuelled a liquidity crunch in other exchanges like BlockFi and Genesis.

While BlockFi filed for bankruptcy in November itself, Genesis has been trying to avoid the same but instead suspended withdrawals.

Genesis has been trying to raise fresh capital for its lending unit, however, Bloomberg reported that some investors who approached for the lifeline have balked at the interconnectedness between Genesis and other related entities that are part of Barry Silbert’s Digital Currency Group.

Currently, Genesis continues to work with its advisors along with collaboration with Digital Currency Group and advisors appointed by other clients to evaluate options to preserve client assets and move the business forward.

Islim's note also mentioned that with the start of 2023, Genesis continues to offer clients the white glove service that they always have in its trading business and appreciates its lending clients’ patience as they make progress toward an equitable solution.

On November 16, 2022, Genesis tweeted "FTX has created unprecedented market turmoil, resulting in abnormal withdrawal requests which have exceeded our current liquidity." It added that its first priority is to serve its clients and preserve its assets. Therefore, in consultation with its professional financial advisors and counsel, Genesis said, "have taken the difficult decision to temporarily suspend redemptions and new loan originations in the lending business."

It went on to reveal that the default of 3AC had negatively impacted the liquidity and duration profiles of its lending entity Genesis Global Capital. Since then, the crypto broker has been de-risking the book and shoring up its liquidity profile and the quality of its collateral.

However, it needs to be noted that Genesis spot and derivatives trading and custody businesses remain fully operational.

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Updated: 04 Jan 2023, 11:32 PM IST
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