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Fears that the collapse of FTX will lead to more destruction in the crypto industry are affecting almost every investor in the United States, from individuals to large Wall Street corporations, and many are wondering if another cryptocurrency market will be next Trading platform called Genesis will fall.
So far, those fears have not materialized, and a Genesis spokesperson said in a statement to NPR on Tuesday that “our goal is to resolve the current lending situation without having to file for bankruptcy.”
But Genesis has reportedly warned potential investors that it may have to file for bankruptcy if it can’t quickly raise a significant amount of cash — $1 billion, according to Bloomberg News.
And there are other worrying signs: Gemini has suspended repayments and stopped making new loans.
“Crypto contagion” is a real possibility in the decentralized system of digital currencies, where investor protections are few. Businesses can seemingly opt out of following standard accounting procedures and controls, and businesses can do so in some obscure way entangled.
FTX and its 100+ subsidiaries around the world had strong relationships with other companies and served more than 1 million customers. That made it easy for his financial problems spread quickly.
BlockFi, one of a handful of companies that has bailed out FTX in recent months, has suspended customer withdrawals citing “a significant exposure to FTX and its affiliates.” It urged its customers not to make any deposits either.
When asked if it was close to bankruptcy, the company’s press team told NPR that “there are a number of scenarios” it could pursue and that it was working to “find the best path for our customers.” “.
At the same time, the collapse of FTX was not limited to companies and investors directly related to the bankrupt business. The stock market’s spectacular implosion, valued at more than $30 billion earlier this year, has fueled volatility in crypto and caused the values of cryptocurrencies and bitcoin, which had already fallen, to fall even further.
It also triggered panic.
Investors pulled more than $400 million from the Gemini exchange, founded by the Winklevoss twins, in a 24-hour period last week when Gemini briefly halted its Genesis-backed yield payout program, Coindesk reported.
Other major exchanges like Binance and Coinbase have also seen significant declines recently, according to Coindesk.
I’m trying to figure out how FTX will affect Genesis
Unlike FTX, which focused on bringing ordinary people into the crypto world, Genesis partners with large institutional investors that have more influence over the financial system.
The promise at the top of the website: “Institutional access. global scale.”
In a series of posts on Twitter, Genesis claimed to have “no ongoing lending relationship with FTX or Alameda,” the crypto hedge fund founded by former FTX CEO Sam Bankman-Fried.
However, the company reportedly owns FTT, a cryptocurrency created by FTX. Its value has fallen to less than $1.50 from an all-time high of $79.53. And Genesis admitted to previously having $175 million in a blocked FTX trading account.
“FTX has caused unprecedented market turmoil, resulting in unusual withdrawal requests that have exceeded our current liquidity,” Genesis said recently, adding that they are working to “source new liquidity.”
According to The Wall Street Journal and Bloomberg News, it was in contact with two firms, Binance and Apollo Global Management. Binance declined to comment on the reports, and Apollo Global Management did not respond to a request for comment.