Genesis Block HK, a crypto over-the-counter (OTC) trading firm based in Hong Kong, has funds stuck in the now-bankrupt crypto exchange FTX, two people with knowledge of the matter told The Block.
The exposure is worth more than $50 million, one of the sources said. The impact is significant enough that Genesis Block is shutting down its OTC business on Dec. 10, according to the source and an email from Genesis Block sent to its customers and obtained by The Block.
"With regret, we will be closing down the genesisblockotc.com portal website on 10 December (Fri) 2022 at 6:00 pm HKT," reads the email. "Withdrawals of user balances are fully functional via the OTC chat group. Please do NOT deposit any crypto assets into the portal."
Genesis Block declined to comment when contacted by The Block.
Genesis Block was founded in 2012 by Wincent Hung and Clement Ip and served both individual and institutional clients. Its OTC trading desk required a minimum of about $20,000 of transaction value, according to its website. Genesis Block and FTX were related, Hong Kong-based news outlet HK01 reported on Thursday. Ip reportedly once served as a director at FTX Hong Kong and the two companies are said to have shared offices in Hong Kong. Ip did not respond to The Block's request for comment.
Reuters, citing one person with knowledge of the matter, reported today that one Genesis Block official was previously a director in FTX Hong Kong, but resigned this month. FTX Hong Kong is one of the 134 FTX-affiliated companies that filed for Chapter 11 bankruptcy protection last week.
Genesis Block HK is the latest firm to suffer from FTX fallout. Crypto.com, Genesis, Galaxy Digital, Nickel Digital and Vauld all have exposure to FTX. High-profile investors of FTX, including Temasek, Paradigm and Sequoia Capital, recently wrote down their investments to zero.
Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.
© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.