Genesis is temporarily suspending withdrawals and new loan originations, after it took large hits from Three Arrows Capital and FTX.
Genesis will continue to offer over-the-counter trading for spot and derivatives trading, plus its custody services. The comments were made by Genesis Interim CEO Derar Islim during a client call, according to CoinDesk.
Genesis was the largest prime broker in the crypto space. In March, it had $14.6 billion of active loans, according to The Block's Data Dashboard. Yet the lending business took a big hit when the cryptocurrency Luna collapsed, removing $30 billion from the crypto market cap and pushing trading firm Three Arrows into bankruptcy. Genesis had made large loans to Three Arrows, which were not repaid. Genesis' parent company DCG took on the debt, which was estimated north of $1 billion.
Following on from this, Genesis started significantly slowing down its operations. Last quarter, its loan originations dropped by a third in dollar value compared to the previous quarter. It also reported just $2.8 billion in active loans. At the same time, it made cost reductions, laying off 20% of its workforce. Top executives left the company, including former CEO Michael Moro and former Chief Risk Officer Michael Patchen.
The sudden collapse of crypto exchange FTX was the most recent blow. Genesis said that its derivatives trading arm had $175 million locked up on the exchange. In response, DCG provided Genesis with a $140 million equity infusion.
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