Genesis Global, a leading, mobile-first global gaming operator, has announced that it would “temporarily suspend redemptions and new loan originations in the lending business.”
It has been reported that In explaining the decision, the firm cited “unprecedented market turmoil” related to the collapse of troubled cryptocurrency exchange FTX, resulting in “abnormal” levels of withdrawals that Genesis Global claims to have exceeded its current liquidity.
However, the firm also added that its current liquidity was negatively impacted by the collapse of hedge fund Three Arrows Capital in June. As part of bankruptcy proceedings, the brokerage has filed a $1.2-billion claim against Three Arrows Capital.
The report said that though it’s unclear what the firm’s liquidity levels are, Genesis Global had $175 million worth of funds stuck on FTX. In response, Digital Currency Group, the parent company of Genesis Global, sent it's subsidiary an emergency $140-million equity infusion to cover losses.
Genesis Global stated:
“We have hired the best advisors in the industry to explore all possible options. Next week, we will deliver a plan for the lending business. We’re working tirelessly to identify the best solutions for the lending business, including among other things, sourcing new liquidity.”
Likewise, Genesis Global also claimed that its spot, derivatives trading, and custody businesses remain “fully operational.” In its latest quarterly report, the firm stated that it has $2.8 billion worth of active loans. Since the announcement, its parent company, Digital Currency Group, has clarified that it has no impact on its own operations.
Thus, Genesis Global currently serves as the liquidity provider of the popular $6.7-billion Grayscale Bitcoin Investment Trust (GBTC). The fund is currently trading at a discount of nearly 40% to its net asset value, as of November 16, in part due to investor speculation on its exposure to Genesis Global.