According to a statement from CEO Derar Islim today, Genesis has stopped making both payments on debt and issuing new loans. The withdrawal requests at Genesis Global Capital exceeded the available liquidity. To examine all the options, the cryptocurrency lending section has hired consultants.
Tether quickly declared that it had virtually no exposure to Genesis or Gemeni Earn following today's Genesis revelations.
Tether claims that the assets sustaining its reserves are more than its liabilities, and those reserves completely support the tokens. The corporation claims that its portfolio of US treasuries, cash, and cash equivalents is strong, conservative, and liquid. Tether will continue to stress the need to safeguard those reserves. Tether stated:
“At this point, it is crucial to emphasize that these reserves have shown to be reliable, consistently displaying resilience during the unfortunate occurrences that have plagued the market this past year.”
According to Tether, business is continuing as usual, and they will continue to put their customers first.
The Cause for Withdrawals Suspension
Today, Genesis Global Capital made the decision to stop allowing withdrawals from its lending platform, which ended the delays and uncertainty. This makes sense given that FTX has suffered as a result of its goals.
The cryptocurrency company's Earn product, which enables users to earn interest on dormant cryptocurrency deposits, is supported by Genesis. While rates vary from coin to cryptocurrency, they might range from 4.5% to 8%.
The exchange's help page states the following:
“Gemini is collaborating with accredited third-party borrowers, which include Genesis, who are assessed through a risk assessment process and evaluate our partners’ collateralization management process.”
According to Gemini's announcement, the finance partner of the Earn program, Genesis Global Capital, LLC (Genesis), has halted disbursements and will be unable to complete customer repayments within the agreed-upon SLA of five business days.
Additionally, it was noted in the warning that the cryptocurrency exchange was working "as quickly as possible" to return user funds from its Earn program. According to Gemini, the modification "does not affect any other Gemini goods or services."
The latest moves taken by Genesis and Gemini are just the most recent illustration of the lingering impact of the collapse of the SBF-led FTX Exchange.
FTX's Collapse Aftereffects
In the wake of FTX's bankruptcy, various trading desks, investment firms, and lending institutions have stopped accepting withdrawals.
Sino Global, a cryptocurrency-focused investment firm, stated on Tuesday that it had "mid-seven figures" in exposure to the platform. A similar company, Ikigai, reported that it had lost control of a "huge percentage" of the investments it had listed on FTX.
Genesis Had Also Invested Extensively in FTX
The Genesis platform revealed that it had over $175 million trapped on its FTX trading account early on Friday, November 11, 2022. In a message sent on Twitter, Genesis said that despite the unusual events taking place on FTX, one of the main exchanges for virtual currencies, the company was doing well.
Genesis asserted that transparency with the cryptocurrency community was one of its values and aims, hence it thought it was crucial to disclose the frozen funds.