HomeHomeMajor crypto brokerage Genesis suspends withdrawals in wake of FTX collapse

Major crypto brokerage Genesis suspends withdrawals in wake of FTX collapse

The lending arm of the cryptocurrency brokerage Genesis is suspending redemptions and new loan originations as it deals with a wave of withdrawals following the fall of FTX. In a statement on Twitter, Genesis says the “abnormal withdrawal requests” have exceeded its “current liquidity.”

FTX, which was once the third biggest cryptocurrency exchange by volume, filed for bankruptcy last week, causing panic to ripple through the crypto community as investors pull their funds from other exchanges in fear that they might suffer the same fate. This influx of withdrawals hit Genesis as well, which revealed last week that it has $175 million locked up in FTX.

In its latest earnings reports, Genesis reported an 80 percent decline in active loans when compared to the previous quarter, slumping from $4.9 billion in the second quarter to just $2.8 billion in the third. Genesis also laid off 20 percent of its workers after 3AC’s collapse and replaced former CEO Michael Moro with COO Derar Islim. Going forward, Genesis says it’s going to announce a “plan for the lending business” next week and that its move won’t affect its trading or custody business.

The news is already starting to reverberate throughout the cryptocurrency industry, though. Gemini, the crypto exchange owned by Tyler and Cameron Winklevoss, announced that it’s pausing withdrawals on its Earn program, which uses Genesis as its lending partner. Circle, the issuer of the USDC stablecoin, is also affected, as it partners with Genesis to extend USDC-based credit to businesses and merchants. As pointed out by Blockworks, Circle’s annual percentage yield (APY) decreased to zero, when it sat at 0.25 percent on Tuesday.

Update November 16th, 3:33PM ET: Updated to add that Circle is also affected by Genesis’ decision to suspend withdrawals.

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