Genesis froze traffic at loan unit affecting Gemini

FTX’s downfall might trigger a domino effect, as liquidity shortage threatens to become a leitmotif for the industry.

Genesis Global Capital – the lending unit of Genesis Global Trading – has paused the issuance and redemption of lew loans, prompting Gemini to pause its Earn program, backed by Genesis.

Genesis Global Trading is a crypto investment bank owned by Digital Currency Group (DCG), which is also the parent company of CoinDesk.

According to CoinDesk’s own report, the decision to “temporarily suspend redemptions and new loan originations” was made because of “extreme market dislocation” and a general lack of trust in the industry because of FTX’s fallout, vice president of communications and marketing at DCG, Amanda Cowie was cited saying.

Sam Bankman-Fried’s FTX crypto exchange has been all the rage in the news these past few days, and for good reason. The company’s crumbling still echoes throughout the industry, and it is likely to continue doing so for quite some time.

This was once again illustrated by how Genesis’ decision affected crypto exchange Gemini’s interest-bearing Earn program.

Genesis is the lending partner of Gemini Earn, and as the former’s lending arm paused redemptions and new loan originations, this also concerned Gemini.

Gemini informed its Earn customers that the service-level agreement (SLA) of five business days will not be met as a result of Genesis’ temporary lending freeze.

Gemini stressed this will not be affecting the rest of its business in terms of products and services.

An unfortunate failure brought Gemini services offline shortly after the announcement, which the company said was a result of “Amazon Web Services EBS outage” at one of its primary databases.

In the meantime, Gemini said that it was “encouraged” by what Genesis and DCG are doing, and their commitment.

Derar Islim, who is interim CEO at Genesis Global Trading, was cited by CoinDesk as saying that the company is looking for ways to resolve the problem with its lending unit, including searching for more liquidity.

Insufficient liquidity resulting from the abnormal amount of withdrawal requests was one of the main culprits that lead to the pause in the first place, and is a recurring problem in the industry lately.

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Written by Kyamil Nasuf


Kyamil is a big tech fan, who loves hummus on everything and has enjoyed writing from a young age. He's had experience in writing anything from essays, through personal art, to news pieces and more serious tech analysis. In recent years he’s found fintech and gambling collide with all his interests, so he truly is a great fit to our team.

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