Digital Currency Group blamed the halt on ‘extreme market dislocation and loss of industry confidence caused by the FTX implosion,’ but said other businesses were unaffected.
Crypto lender Genesis Trading has joined the ranks of centralized lenders pausing withdrawals in the wake of the collapse of the FXT exchange and its empire of related businesses.
With other lenders like SALT and BlockFi having frozen withdrawals earlier this week, it seems another wave of casualties is hitting lending firms which had survived the earlier wave of bankruptcies over the summer following the collapse of the Terra/LUNA stablecoin ecosystem and hedge fund Three Arrows Capital (3AC).
At 8 a.m. this morning, Genesis said:
“Our #1 priority is to serve our clients and preserve their assets. Therefore, in consultation with our professional financial advisors and counsel, we have taken the difficult decision to temporarily suspend redemptions and new loan originations in the lending business.”
It is looking into “all possible options” including “sourcing new liquidity,” Genesis said.
Other Businesses Unaffected
But, Genesis emphasized that its spot and derivatives trading business and its custody business “remain fully operational.” It added:
“We would like to emphasize that Genesis Global Trading, our broker/dealer that holds our BitLicense, is independently capitalized and operated — and separate from all other Genesis entities.”
“Importantly, this temporary action has no impact on the business operations of DCG and our other wholly owned subsidiaries,” DCG added in its tweet.
This include Grayscale Investments, which runs the Grayscale Bitcoin Trust, and crypto media outlet CoinDesk.