Genesis Trading, which provides brokerage services for cryptocurrencies, is named as one of the companies at risk after FTX. Allegedly, Genesis Trading is facing potential solvency issues. Here are the details…
Crypto platform Genesis is the next platform?
cryptocoin.com As we reported, FTX announced its bankruptcy on Friday last week. Prior to that, withdrawals were suspended due to the liquidity crisis. These developments in FTX have negatively impacted the entire crypto market. For example, lending platform BlockFi has announced that it is in distress due to FTX exposure. Some platforms that are not exposed to FTX are also negatively impacted.
For example, Hong Kong-based AAX stated that it has suspended withdrawals and is currently seeking capital. AAX announced that it has nothing to do with FTX. However, investors in the market want to withdraw their assets from their trading platforms as quickly as possible and avoid any hassle later.
The latest platform to have a solvency problem was Genesis. Tomorrow the platform will hold a meeting with creditors. It will explain Genesis’ current status, FTX exposure, and relationships with Alameda Research. If the rumors are true, the firm may terminate GBTC and ETHE trust funds to reimburse lenders. Digital Currency Group (DCG) is the parent company of Genesis and GBTC, Grayscale behind ETHE.
We're hearing semi-credible rumors that Genesis may be having solvency issues. They are having a call with their creditors tomorrow at 8 AM EST to explain the situation. If true, they may possibly be dissolving ETHE and GBTC to pay back their lenders. We will know more tomorrow.
— Autism Capital 🧩 (@AutismCapital) November 16, 2022
Eyes on Grayscale
The collapse of FTX and Alameda Research fueled the negative impact on the market. This has caused several crypto companies to face financial and withdrawal problems. Some plan to file for bankruptcy protection. Genesis Trading is also said to be facing solvency issues. The situation will become clearer as a result of the meeting to be held by Genesis interim CEO Derar Islim. After the problem in Genesis, eyes were turned to Grayscale, one of the most popular asset management company in the cryptocurrency space.
As it is known, Grayscale allows institutional investors to enter the field with Bitcoin and Ethereum trust funds. Autism Capital claims in a tweet that Grayscale controls GBTC and ETHE trust funds, not Genesis. But Genesis and the Digital Currency Group, the parent company of Grayscale, support Genesis. Also, according to some, a solvency issue may force DCG to dissolve trust funds due to financial problems.
As part of the transparency, Genesis Trading made disclosures. He reported that he has $175 million in locked funds in his FTX trading account, but there are no financial risks to FTX. As a result, DCG provided Genesis with an equity infusion of $140 million. Grayscale’s GBTC is trading at a 41 percent discount amid the FTX crisis. Cathie Wood’s Ark Invest recently acquired GBTC for $2.8 million.
Meanwhile, ETHE suffered a record drop amid the FTX crash. It is currently trading at a premium rate of 34.47% according to Coinglass data.
