How Genesis Woes Transferred Over To Gemini Users: Fallout From FTX Continues

Zinger Key Points
  • Genesis Interim CEO Derar Islim told customers on Wednesday that Genesis Trading suspended withdrawals.
  • Genesis disclosed that its derivatives unit had about $175 million in locked funds in its FTX trading account.
How Genesis Woes Transferred Over To Gemini Users: Fallout From FTX Continues

Genesis Global Capital LLC — one of the largest lending companies in crypto and a Digital Currency Group (DCG) subsidiary — is showing signs of possible bankruptcy caused by the fall of major crypto exchange FTX and Gemini users are also being impacted.

What Happened: Gemini announced that it paused withdrawals from its interest-earning program Gemini Earn because the company learned that Genesis Global Capital "will not be able to meet customer redemptions within the service-level agreement of 5 business days." The firm promised:

"We will continue to work with them on behalf of all Earn customers. This is our highest priority."

Fortunately, the exchange announced that the issue does not affect any other Gemini products and services, since the company "is a full-reserve exchange and custodian" that holds all user funds 1:1 and keeps them available for withdrawals at all times.

DCG, the world's largest digital currency asset manager, said its other operations were not impacted, including its Grayscale Bitcoin Trust GBTC.

Also Read: Sam Bankman-Fried Is A 'Criminal,' Says Coinbase CEO, Calls Out Mainstream Media For 'Puff Pieces' 

The announcement followed Chinese crypto reporter Colin Wu reporting that Genesis Trading sent a letter to its client for a meeting that was held on Wednesday morning. According to the Wu, "Genesis is the largest Lending company in the crypto" but it was compromised after suffering "huge losses on 3AC Babel and FTX."

According to a Coinbase report, during the call, Interim CEO Derar Islim told customers that Genesis Trading suspended withdrawals. The developments follow Genesis disclosing that its derivatives unit had about $175 million in locked funds in its FTX trading account and Digital Currency Group injecting $140 million into the subsidiary to keep it alive.

Now Read: Bahamas Arm Of Cryptocurrency Exchange FTX Files For Chapter 15 Bankruptcy: What It Means For Creditors

 

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