Genesis Global Capital, a cryptocurrency broker, announced on Wednesday that it has suspended redemptions and fresh loan originations at its financing division as the latest indication of the industry’s reaction to the collapse of major crypto exchange FTX last week.
In one of the most publicized cryptocurrency meltdowns, FTX filed for bankruptcy shelter on Friday after traders withdrew $6 billion from the platform in only three days.
The decision to temporarily halt repayments and new loan issuances in the finance company was a difficult choice. A Genesis representative said in a statement that all parties concerned are making every effort to secure the required liquidity to fulfil their lending client responsibilities.
Grayscale’s parent company, Digital Currency Group, an investor that also owns Genesis, stated on Twitter that the decision to halt redemptions was created in response to the FTX collapse’s tremendous market disruption and lack of industry trust.
According to Digital Currency Group, the Genesis suspension does not affect the company’s business activities or those of its other wholly-owned companies.
Genesis Global Capital is neither counterparty nor a services company for any Grayscale goods, based on a series of tweets from Grayscale, which also stated that Grayscale products remain operational normally.
The statement revealed neither Grayscale nor the custodian of the underlying assets for the products may borrow, lend, rehypothecate, and otherwise encumber those assets.
Genesis reported last week that its derivatives unit has nearly $175 million in money parked on FTX.
Given that Genesis has several heavily regulated counterparties, according to Joseph Edwards, investment partner at Securitize Capital, this should be considered as a stride outward rather than upward. This will cause uneasiness among OTC desks in North America and Europe in particular.
The collapse of FTX, which has wreaked havoc on the cryptocurrency market and exposed numerous asset managers and trading organizations to the exchange, has not only affected Genesis but other businesses as well.
The Wall Street Journal revealed on Tuesday that cryptocurrency lender BlockFi, which has previously disclosed it has a large exposure to FTX, wants to lay off staff as it gets ready to file for bankruptcy.
As per U.S. court documents, the creator of FTX, Sam Bankman-Fried, is being sued in a class action by investors who allege the firm’s yield-producing cryptocurrency accounts broke Florida law.
The FTX yield-bearing accounts, according to the proposed class action lawsuit filed late on Tuesday in Miami, were unregistered securities that were forcibly sold throughout the country.
The NFC quarterback star Tom Brady and tennis player Naomi Osaka are among the celebrities who are being sued for allegedly aiding in the promotion of FTX.
Inquiries for a response on Wednesday were unanswered by representatives for Brady, Bankman-Fried, and Osaka.
The largest cryptocurrency in the world, Bitcoin, was last trading at $16,400, down 2.6%. It has already decreased by almost 20% this month.
Meanwhile, on the latest front of Mask’s ordeal, here are the additional updates: The contentious Tesla package enables Musk to purchase 1% of Tesla’s stock at a significant discount each time increasing performance and financial goals are achieved. Musk would not receive anything else.
In court documents, it is stated that Tesla has achieved 11 of the 12 goals.
Due to the fact that courts frequently respect the discretion of directors, shareholders rarely have the ability to contest executive compensation. A motion to dismiss the Musk lawsuit was denied when it was decided that he would qualify as a controlling shareholder, which means harsher regulations are in effect.
There has never been a situation where a chief executive officer who owns 21.9% of the company receives a structured payoff of this size. Professor of corporate law Lawrence Cunningham at George Washington University remarked on the absence of precedent.