Genesis Global Capital – a crypto lending company – has suspended all redemptions and related activity as it’s now one of the latest firms to be feeling the heat and buzz caused by the collapse of FTX.
Genesis Global Is Stopping All Redemptions
A spokesperson for Genesis Global is assuring followers that the move is only temporary. The stoppage is designed to help the company better understand what happened and protect itself from potential ripple effects following the exchange’s crash.
Right now, the company is working on establishing the liquidity it needs to ensure all traders meet the company’s present lending obligations. At the time of writing, trading and custody businesses with Genesis remain unaffected.
Joseph Edwards – an investment partner at Securitize Capital – said that the maneuver is not in the company’s best interest and could potentially cause people to be less trusting of it. He mentioned in a recent interview:
This shouldn’t be seen as a step up, but rather as a step outwards given that Genesis has a number of significant regulated counterparties. There will be discomfort being felt among OTC desks in Europe and North America in particular.
The digital currency space could be forever marred by the actions and bad press surrounding FTX, which for a while, was considered one of the top players in the industry. At only three years of age, FTX rose to prominence rather quickly, ultimately placing itself in the top five crypto exchanges. Its founder, a young 30-something named Sam Bankman-Fried, was lauded as a genius of sorts, and just before the company collapsed, his net worth was valued at just over $16 billion.
But it was in mid-November when everything began hitting the fan. SBF announced on social media that his company was experiencing a liquidity crunch and lacked funds to stay fully operational. He approached his larger rival and competitor Binance for assistance and spoke to that company’s founder Changpeng Zhao about a potential merger, which appeared to be moving forward for a while.
FTX Has Put a Serious Stain on the Crypto Space
Just a few days later, however, Binance announced that it would not be purchasing the smaller company, claiming that the issues FTX was facing were simply too big for it to handle. As a result, Sam Bankman-Fried quickly resigned from his post, and FTX – now billions of dollars in debt – was now entering bankruptcy proceedings. It was a sad and ugly sight to see, and one that caused many to view the crypto space in a very negative light.
The situation has caused several members of Congress to renew their calls for crypto regulation, saying that if such a company can fall apart in such a short period, virtually no one and nothing is safe, and the government needs to step in to ensure protections are in place.
Source: https://www.livebitcoinnews.com/crypto-lending-firm-genesis-global-halts-redemptions/