FTX Makes Another Storm" Genesis Trading, The World's Largest Crypto Lender, Is Crashing

(Recap:Doctor Doom: Binance CZ is like a walking “time bomb”, more unreliable than SBF!）
(basic supplement:Messari: FTX users could recover 40-50% of resources）

Genesis Global Trading interim chief executive Derar Islim told clients on a conference call Wednesday that his lending arm is temporarily suspending repayments and new loan originations following the FTX debacle.

According to Bloombergbreak the news, withdrawal requests have exceeded the current liquidity of the Genesis Global Capital lending arm. Genesis has hired consultants to explore all possible options. The official interpretation of the reason is:

“3AC’s default negatively impacted FTX and caused unprecedented market volatility, resulting in abnormal withdrawal requests that exceeded our current liquidity.”

Genesis lent up to US$2.36 billion in loans to Three Arrows Capital, resulting in a loss of US$1.2 billion; mostly GBTC as collateral.

Further reading:Three Arrows owes $3.5 billion to 27 companies! Genesis Borrows 2.3 Billion To Claim 1.2 Billion Magnesium And Creditors Board Set Up

Why lend money to Three Arrows Capital?

Why would you want to lend such a huge amount of money to Three Arrows Capital (Three Arrow. Capital, 3AC), the answer may be related to GBTC. The analysis article states that DCG and 3AC are involved in some sort of scheme to extract value from GBTC’s premium.

This provides a lot of leverage for the 3ACs, which they cash out and use to fund various things, and also generates a lot of short-term profits for DCG through commissions. But 3AC was heavily in debt and they went bankrupt with the Luna debacle. The epic damage of this debacle is only starting to take its toll, and GBTC could be at the center of even bigger problems.

Further reading:Three Arrows Capital Breaks Silence｜Founder Interview: Luna, GBTC Transactions Lead to Thunderstorms, Plan to Go to Dubai

Other than that, the Genesis style is pretty cheesy.

After PayPal Finance was on the verge of collapse on March 12, 2020, only Genesis continued to provide loans and support on a large scale. This also caused the loss of nearly US$150 million when PayPal Finance went bankrupt in 2022 and is been the largest creditor