Users Of Gemini Earn Unable to Withdraw Assets as FTX Contagion Spreads
Genesis Global Capital, the lending arm of leading digital asset brokerage Genesis Trading, announced Wednesday that it has halted withdrawals and new loans due to “unprecedented market turmoil” created by FTX’s collapse.
Withdrawal requests have exceeded the firm’s on-hand store of liquid assets, it said.
The move does not affect operations at Genesis’ trading and custody businesses, nor Genesis Global Trading, its broker/dealer unit which holds a license in New York.
The announcement is the latest sign of contagion following FTX’s swift collapse, and the fallout has already affected a partner company.
Gemini Pauses Withdrawals From Earn Program
Crypto exchange Gemini offers an “Earn” program that deploys its assets through Genesis’ lending business. Shortly following Genesis’ announcement earlier today, Gemini confirmed that customers using the Earn program would not be able to withdraw their funds.
Gemini has not disclosed the amount of exposure it has to Genesis, but the Earn program once held $3B in crypto assets, according to an August 2021 blog post.
“We are disappointed that the Earn program [agreement] will not be met, but we are encouraged by Genesis’ and Digital Currency Group’s commitment to doing everything in their power to fulfill their obligations to customers under the Earn program,” Gemini said in a statement.
It should be noted that the program’s terms of service indicate that users may be left with no recourse should Genesis fail to repay its loans.