Derivatives business presently has $175 million in locked funds in the FTX trading account.
However, the firm assured its users that this does not affect its market-making efforts.
Furthermore, Genesis Trading stated that it has no ongoing lending arrangement with FTX or Alameda. However, Genesis' lending arm suspended withdrawals a few days after the tweets.
The firm tweeted on November 16 that “cryptocurrency lender Genesis Global Capital has halted withdrawals and loan applications following the collapse of the FTX Exchange.”
What prompted the firm to alter its stance to halt customer withdrawal and loan originations?
Following the announcement of locked funds in the FTX trading account, the platform experienced a spike in withdrawal requests that exceeded the current liquidity. As a result, to safeguard customers' funds and after consulting financial advisers, the platform opted to halt withdrawals and loan origination.
However, Genesis Global Trading told its clients that they are working with the best advisor in the industry and that a recovery plan for their lending arm would be announced soon.
Meanwhile, the Winklevoss brothers' cryptocurrency platform, Gemini, made a similar announcement on Wednesday. The platform noted that “we have suspended withdrawals and will be unable to meet customer redemptions within the service-level agreement (SLA) for 5 working days.”
This implies that the FTX meltdown has started affecting the crypto market on a broader level and exposed crypto exchanges. Now the question arises, is this just the beginning, or will it soon come to an end?
Is this an ice age for Crypto as piece after piece the dominoes fall citing FTX collapse?
The collapse of FTX, one of the world's largest cryptocurrency exchanges, has been described as a breathtaking event. And the whole situation calls into question the overall stability of cryptocurrency at a time when the market is already struggling.
As a result, BlockFi, a crypto lending company with major exposure to FTX, halted withdrawals earlier this week and apparently prepared to file for bankruptcy. With Genesis and Gemini also suspending withdrawals, the FTX crisis may soon affect other crypto firms and projects.
However, these instances might be an addition to prolonging the extended bear market. But it will be intriguing to see what the future holds for the crypto sector.
What do you think? Will Genesis Trading Arm propose a recovery plan, or will we witness another BlockFi-like scenario? Share your views in the comment section below.
Read also: Why are Celebrities being Targeted in the FTX Case? Is Brand Endoresemnt Illegal Now?
