• Genesis is halting its operations to ensure the safety and security of its platform and users.
• The FTX fallout is proving to have a ripple effect in the crypto space, making crypto companies fall like dominos.

The Digital currency group (DCG) is a capital firm that is focused on trading cryptocurrencies. The Crypto investor is giving an equity infusion of $140 million to Genesis Global Trading. DCG is the parent company of Genesis and Grayscale. Grayscale Investments is a digital currency asset management firm.

Genesis is a digital currency lending platform in the crypto space and has been a jewel in DCG’s portfolio. The company plays a pivotal role in providing access and managing risk for crypto institutions.

Genesis has stopped lending, here’s why?

Genesis, the digital currency lending platform, has announced that it is suspending lending withdrawals for all its users. This was in a  statement, the company said that it is doing this in order to ensure the safety and security of its platform and its users.

With contagion spreading like wildfire in the crypto space, Genesis is the latest crypto domino to fall after FTX’s implosion earlier this month. FTX filed for bankruptcy on November 11 in the US Californian court, after failing to reach their customer’s requests to withdraw funds. The company allegedly lent companies owned by Sam Bankman loans, specifically Alameda, $10 billion.

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"

— Tree (🌲,🌲) (@Tree_of_Alpha) November 16, 2022

Genesis global capital, Genesis’ lending arm made the decision to temporarily suspend redemptions and loan originations. This was done in response to the extreme market dislocation and loss of industry confidence caused by the FTX implosion.

Related: FTX DEBACLE IN A NUTSHELL

This announcement came after users complained about the company’s lending practices accusing the firm of being a “predatory lender” and of charging excessively high-interest rates. However, the company has denied these claims, saying that its lending rates are “competitive and transparent.

Genesis currently has a whopping $2.8 billion loaned to Three Arrows, according to a July court filing. Genesis’ parent, DCG later filed a claim for $1.2 billion against Three Arrows.

Derar Islam, the interim CEO of Genesis, said that the trading and crypto custody arm of Genesis would remain unaffected.

The Domino Effect that Genesis Brings

Genesis halting its operations is a pick over the FTX wreckage. Genesis reported earlier that its derivatives business has about $175 million in locked funds in its FTX trading account.

This additional capital will bolster our position as a global leader in crypto capital markets and allow us to support our clients and the growing demand for our services. Genesis stated in its client note.

Moving on Genesis added that it had no linkage with the fallen empire FTX or Alameda Research. The two companies founded by the golden crypto boy entrepreneur Sam Bankman-Fried have been in a free fall.

Absolutely zero bids for Genesis and DCG raise.

**Genesis creditors are preparing for an ‘imminent’ bankruptcy filing.

— Andrew (@AP_Abacus) November 20, 2022

Investors are concerned that those losses could pile up. Genesis extended $130.6 billion in crypto loans and traded $116.5 billion in assets, according to its website.

Crypto companies have distanced themselves from Genesis amid concern that its troubles could reverberate. Crypto.com, an exchange, and Tether, which operates the world’s largest stablecoin, on said Wednesday they had no exposure to Genesis.

Paolo Ardoino, Tether’s chief technology officer, said FTX’s connections to crypto firms could potentially have a domino effect on other companies, although it remains to be seen how that will play out.

Genesis also made loans to Alameda, a trading company closely linked with FTX, and accepted FTT tokens as collateral, according to a source familiar with the matter. The price of that token has fallen 93% in the last month, according to the analytics website CoinGecko.

Crypto experts said some of the industry’s biggest names could yet be engulfed in Genesis’ troubles.