According to multiple media reports, Genesis Global Capital (GGC) investment firm paused all withdrawal of funds on Wednesday based on its exposure to Sam Bankman-Fried’s crypto exchange platform FTX. Genesis’ Interim CEO, Cerar Islim, first shared the development.
The CEO further noted that new loan originations had been halted alongside all withdrawals due to insolvency. He explained that this is done to keep the company in business.
Digital Currency Group (DCG), a parent company to Genesis Global Capital, shared a statement confirming the CEO’s reasons for stopping funds withdrawals. The DCG added that it made the decision in response to the extreme market liquidation and loss of industry confidence due to FTX’s bankruptcy.
However, the VP of Communications, Amanda Cowie, clarified that the trading outfits and the company’s custody are unaffected by the firm’s recent decisions. Notably, the firm’s derivative arm reportedly invested about $175 million worth of crypto assets on the FTX exchange before the unforeseen freeze of customers’ fund withdrawals by the exchange.
Gemini’s Earn Program Also Affected
In a related development, Gemini’s Earn Programinvestors are affected by the new development. According to a recent Genesis blog post, the cryptocurrency exchange platform could not meet its five-day promised period as stipulated in the earn program agreement.
The exchange created by the Winklevoss twins chose Genesis Global Capital as their lending partner. But, expressing its current investment status to its investors, the exchange platform vented its disappointment at being unable to keep to its end of the deal.
But it added that GGC and its parent company, DCG, are committed to doing everything within their strength to keep their agreement with investors in its Earn program.
The effects of FTX Contagion keep mounting as various firms take turns to reveal their level of exposure to the bankrupt crypto exchange. The appointment of Cerar Islim as interim Genesis CEO came after former president Michael Moros’ appointment was called off.
Moro stepped down following exposure of billions to the Three Arrows Capital (3AC) firm, a crypto hedge fund founded by Kyle Davies and Su Zhu. 3AC also filed for bankruptcy following the Terra network collapse in May.
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