Genesis and Grayscale Hit With Insolvency Issues Following FTX Collapse

Genesis and Grayscale Hit With Insolvency Issues Following FTX Collapse

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The collapse of the FTX crypto exchange continues to spread insolvency rumors across the crypto industry, and now, Genesis and Grayscale are the latest to reportedly be affected.

The parent company of Genesis is Digital Currency Group (DCG), which is also the parent company of Grayscale, one of the largest holders of Bitcoin.

Currently, a call has been scheduled with Genesis creditors and during the call, Genesis is expected to disclose its connection to the bankrupt FTX and its trading arm, Alameda research.

Also, the firm is expected to dissolve its GBTC and ETHE Trust to pay their debts, although, a proof-of-stake infrastructure provider Autism Capital said that it is the Grayscale  that controls GBTC and ETHE and not Genesis Trading.

Genesis Trading has declared that it has over $170 million locked in its FTX account but the DCG, the company that controls both Genesis and Grayscale has given $140 million in equity to Genesis.

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Genesis Pauses Withdrawals Over Liquidity Problem

Genesis Global Capital, a trading arm of Genesis Trading has halted withdrawals due to liquidity problems.

This was announced in tweets by DCG, the parent company of Genesis Trading, and according to the tweets, the move is attributed to bankruptcy of the FTX exchange.

“Today Genesis Global Capital, Genesis Trading’s lending business, made the difficult decision to temporarily suspend redemptions and new loan originations,” part of the tweets stated.

“This decision was made in response to the extreme market dislocation and loss of industry confidence caused by the FTX implosion.”

The thread added that other operations including Grayscale and its Grayscale Bitcoin Trust (GBTC) are not affected.

“The impact lies with the lending business at Genesis and does not affect Genesis’s trading or custody businesses,” the thread concluded.

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