Genesis Global Capital, the lending unit of Genesis Trading, announced the decision to temporarily suspend redemptions on November 16, pointing out to “abnormal withdrawal requests” that currently exceed the company’s liquidity.
"Today Genesis Global Capital, Genesis's lending business, made the difficult decision to temporarily suspend redemptions and new loan originations. This decision was made in response to the extreme market dislocation and loss of industry confidence caused by the FTX implosion," parent company Digital Currency Group tweeted.
"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," the company added.
Earlier this year, Genesis Global Trading was negatively impacted by the failure of hedge fund Three Arrows Capital, facing “hundreds of millions” in losses. Since then, the company took an effort to de-risk the book and strengthen its liquidity profile and quality of the collateral.
Following the disclosure, crypto exchange Gemini, founded by Cameron and Tyler Winklevoss, halted its yield product for retail investors due to Genesis being a key partner in the program. Several hours later, users reported a broad outage that affected Gemini’s trading platform and fiat deposits and withdrawals.
“We experienced an Amazon Web Services EBS outage with one of our primary databases. We have restored the database and are bringing the exchange back up,” Gemini tweeted.