The lending arm of the cryptocurrency brokerage Genesis is suspending repayments and new loans as it faces a wave of withdrawals following the fall of FTX. In a statement on TwitterGenesis says “abnormal withdrawal requests” have exceeded “current liquidity”.
FTX, once the third-largest cryptocurrency exchange by volume, filed for bankruptcy last week, sparking panic in the crypto community as investors pulled their money from other exchanges for fear they would suffer the same fate. This influx of withdrawals also affected Genesis, which showed last week that this is the case $175 million locked up in FTX.
In the latest earnings reports Genesis reported an 80 percent decline in active loans compared to the prior quarter, down from $4.9 billion in the second quarter to just $2.8 billion in the third. Genesis also laid off 20 percent of its employees after the collapse of 3AC and replaced former CEO Michael Moro with COO Derar Islim. Going forward, Genesis says it will announce a “lending plan” next week and that its move will not affect its trading or custody business.
However, the news is already starting to reverberate in the cryptocurrency industry. Gemini, the crypto exchange of Tyler and Cameron Winklevoss, announced that it is pausing recordings on its Earn program, which uses Genesis as a loan partner. Circle, the issuer of the USDC stablecoin, is also affected as it partners with Genesis to provide USDC-based credit to businesses and traders. As pointed out by BlockworkCircle’s annual percentage revenue (APY) fell to zero, when it sat at 0.25 percent on Tuesday.
Update Nov. 16, 3:33 PM ET: Updated to add that Circle is also affected by Genesis’ decision to suspend withdrawals.