Genesis' crypto lending unit, which had $2.8B in active loans in Q3, suspends redemptions and new loan originations; trading and custody units are unaffected

The unit, known as Genesis Global Capital, serves an institutional client base and had $2.8 billion in total active loans as of the end of the third quarter of 2022.

CoinDesk 2022-11-16 Nelson Wang

Context & Ripple Effects

Genesis had built an institutional lending business serving exchanges and trading desks, reporting $1.53B loaned since its 2018 launch. The suspension freezes activity against a much larger Q3 active-loan book while leaving the group’s trading and custody operations running.

The halt became the opening step in a worsening financing squeeze: related coverage later reported a search for more than $1B in funding and ultimately a Chapter 11 filing. That arc makes the separation of lending from trading and custody central to assessing where disruption is concentrated.

First-order effects

Genesis Global Capital’s institutional lending clients cannot redeem funds or obtain new loans, while its $2.8B active-loan portfolio remains outstanding.
Genesis’ trading and custody units continue operating, isolating the immediate interruption to the lending business rather than all Genesis services.

Second-order effects

Exchanges and trading desks that had been core Genesis borrowers lose a source of financing and must manage positions without new Genesis-originated credit.
The freeze raises the urgency of Genesis’ funding needs, a pressure reflected in the subsequent attempt to raise fresh capital for the lending unit.

Third-order effects

The later bankruptcy filing shows how a lending-unit liquidity stop can progress from constrained client access to a court-supervised restructuring, even when adjacent services remain operational.
For institutional crypto credit, the episode reinforces a divide between operational services such as custody and balance-sheet lending, whose liabilities can force a rapid halt in new business.

The trend: Institutional crypto firms are separating steadier service operations from balance-sheet lending as liquidity stress exposes the latter’s refinancing risk.

Discussion

@autismcapital @autismcapital on x
We're hearing semi-credible rumors that Genesis may be having solvency issues. They are having a call with their creditors tomorrow at 8 AM EST to explain the situation. If true, they may possibly be dissolving ETHE and GBTC to pay back their lenders. We will know more tomorrow.
@genesistrading Genesis on x
We recognize how challenging this past week has been due to the impact of the FTX news. At Genesis we are entirely focused on doing everything we can to serve our clients and navigate this difficult market environment.
@tree_of_alpha @tree_of_alpha on x
Genesis' Crypto-Lending Unit Is Halting Customer Withdrawals in Wake of FTX Collapse - Coindesk “Importantly, this decision has no impact on the business operations of DCG and our other wholly owned subsidiaries”
@hodlwithledn @hodlwithledn on x
1/ Ledn has no exposure to Genesis and remains fully operational. https://twitter.com/...
@fintechfrank Frank Chaparro on x
Genesis just held a 7 minute call with clients to let them know withdrawal requests for Genesis Capital have exceeded their liquidity profile; CEO says he's working on a plan with advisors to fix their liquidity profile and serve clients
@dcgco @dcgco on x
Today Genesis Global Capital, @GenesisTrading's lending business, made the difficult decision to temporarily suspend redemptions and new loan originations.
@gemini @gemini on x
1/6 We are aware that Genesis Global Capital, LLC (Genesis) — the lending partner of the Earn program — has paused withdrawals and will not be able to meet customer redemptions within the service-level agreement (SLA) of 5 business days. https://www.gemini.com/...
@lawmaster Larry Cermak on x
Gemini Earn also pausing withdrawals https://www.gemini.com/... https://twitter.com/...
@moonoverlord @moonoverlord on x
Products that are bankrupt Celsius BlockFi FTX Voyager Gemini Earn Genesis Products that are working fine Uniswap Yearn Maker Aave Lido Curve
@cobie @cobie on x
https://twitter.com/...
@emostaque Emad on x
It's basically summer 2008 for crypto. https://twitter.com/... https://twitter.com/...
@dcgco @dcgco on x
This decision was made in response to the extreme market dislocation and loss of industry confidence caused by the FTX implosion.
@dcgco @dcgco on x
The impact lies with the lending business at Genesis and does not affect Genesis's trading or custody businesses. Importantly, this temporary action has no impact on the business operations of DCG and our other wholly owned subsidiaries.
@tree_of_alpha @tree_of_alpha on x
What did he know?! https://twitter.com/...
@gainzy222 @gainzy222 on x
💀💀💀💀💀💀 https://twitter.com/...
@kylebrussell Kyle Russell on x
The virus is spreading! 🚀 https://twitter.com/...
@ercwl @ercwl on x
is a properly run lender supposed to be able to withstand a bankrun? The nature of their biz is that they take collateral in the billions that they cannot exit onto the market all at once without serious slippage and losses or do we think overcollat thresholds should cover that
@raoulgmi Raoul Pal on x
Looks like it's pretty much the end of the CeFI business model of laying off crypto lending risks onto retail investors. It will have to be DeFi and also wholesale lending markets with bigger traditional balance sheets and regulated better trad risk management going forwards.
@dogetoshi Steven on x
Genesis Calls: - Withdrawals suspended - Team is trying to shore up liquidity to meet requests - Will deliver a plan next week - Blames FTX for creating market conditions that resulted “abnormal request” which “exceeded available liquidity”
@satoshiflipper Satoshi Flipper on x
✔️ get the daily bad news out of the way https://www.coindesk.com/...
@nexo @nexo on x
.@Nexo would like to confirm that we have $0 exposure to Genesis, Gemini, Luno, and BlockFi. Our hearts go out to those affected. https://www.gemini.com/... https://www.coindesk.com/... 1/
@seyitaylor @seyitaylor on x
Until this crisis, had no idea who these people were. https://twitter.com/...
@tree_of_alpha @tree_of_alpha on x
@lawmaster This new contagion variant spreading faster than the previous one. There's also leftover effects from Luna/3ac where companies that took a hit but were still standing are now crumbling on the second hit from FTX.
@dylanleclair_ Dylan LeClair on x
These sort of “announcements” never are good. https://twitter.com/...
@kamikaz_eth @kamikaz_eth on x
Jfc here we go https://twitter.com/... https://twitter.com/...
@cryptocevo @cryptocevo on x
Genesis suffered major losses earlier this year due to the failure of hedge fund Three Arrows Capital (3AC). Now they're temporarily suspending withdrawals caused by the FTX implosion. https://www.coindesk.com/...
@mayhem4markets @mayhem4markets on x
The dominoes are beginning to fall in the world of crypto. Genesis lacks the funds to honor client withdrawal requests. This crypto exchange insolvency situation is likely to worsen materially in the weeks and months ahead. Many are poorly positioned for the ‘new normal’. https:/…
@colin_gladman Colin on x
Crypto broker Genesis now suspending withdrawals due to “lack of liquidity”. Dominos continue to fall in the crypto world.
@dannydevan Danny Devan on x
You thought I was kidding? Blockfi yesterday and now Genesis. https://twitter.com/... https://twitter.com/...
@txmctrades @txmctrades on x
Genesis lending desk announces they're halting withdrawals. The contagion continues to spread. https://twitter.com/...
@mdudas Mike Dudas on x
gonna be a big week https://t.co/GR0vNEWpnu
@wublockchain Wu Blockchain on x
Genesis: The default of 3AC negatively impacted the liquidity and duration profiles of our lending entity. Genesis has lent up to $2.36 billion to 3AC. Read more: Who lent money to Three Arrows Capital? https://wublock.substack.com/ ... https://twitter.com/...
@hsakatrades @hsakatrades on x
I yearn to see the day when this tweet will stop being relevant. https://twitter.com/...
@defiyst @defiyst on x
The narrative that @DCGco would dissolve the Grayscale trusts to “save” @GenesisTrading made 0 sense to me. DCG make ~$180m annually in mgmt fees alone at CURRENT prices for doing effectively nothing, risk-free. https://twitter.com/...
@tree_of_alpha @tree_of_alpha on x
The fact DCG owns both Genesis and Coindesk, and Genesis is forced to halt withdrawals after a bankrun initiated by a Coindesk exclusive regarding Alameda's balance sheet is almost poetic.
@dylanleclair_ @dylanleclair_ on x
“This decision impacts the lending business at Genesis and does not affect Genesis's trading or custody businesses. Importantly, this decision has no impact on the business operations of DCG and our other wholly owned subsidiaries,”
@mrjasonchoi Jason Choi on x
Less sensationalist summary: - Genesis is “fully operational” but temporarily halting origination and withdrawals - Currently sourcing new liquidity - Announcing plan next week https://t.co/YN7rDjBePe
@dylanleclair_ @dylanleclair_ on x
Genesis' Crypto-Lending Unit Is Halting Customer Withdrawals in Wake of FTX Collapse - Coindesk ANOTHER ONE
@deitaone @deitaone on x
GENESIS' CRYPTO-LENDING UNIT IS HALTING CUSTOMER WITHDRAWALS IN WAKE OF FTX COLLAPSE - COINDESK
@adamscochran Adam Cochran on x
Genesis seems dead in the water. Halting all withdraws per Coindesk. Big things starting to unwind here. Holy shit,
@fundiescapital @fundiescapital on x
Genesis suspends withdrawals. Writing on the wall for everything in crypto. Flood of capital and expansion of credit in sector helped drive prices up. Now seeing the other side of that mountain. https://twitter.com/...

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