Crypto broker Genesis, which has S’pore unit, halts withdrawals in wake of FTX collapse
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Digital currency broker Genesis Trading said it made the move after consulting its financial advisors and counsel.
PHOTO: REUTERS
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SINGAPORE - Digital currency broker Genesis Trading, which has a Singapore arm, has stopped withdrawals in its lending business, becoming the latest casualty of crypto exchange FTX’s implosion.
In a series of Twitter posts on Wednesday night, the company said: “FTX has created unprecedented market turmoil, resulting in abnormal withdrawal requests which have exceeded our current liquidity.”
The company, whose Singapore arm is Genesis Asia Pacific, said its first priority “is to serve our clients and preserve their assets”.
After consulting its financial advisers and counsel, Genesis Trading said it will take the “difficult decision to temporarily suspend redemptions and new loan originations in the lending business”.
The company said the default of bankrupt hedge fund Three Arrows Capital
It tried to reduce risks and shore up its liquidity profile, as well as the quality of its collateral, but was hit by a crypto run after the fall of FTX.
Genesis Trading said its spot and derivatives trading and custody businesses remain fully operational, while its broker-dealer Genesis Global Trading that holds its BitLicense is “independently capitalised and operated” and separate from all other Genesis entities.
The Monetary Authority of Singapore (MAS) had in late June granted in-principle approvals to Genesis Asia Pacific,
Genesis Asia Pacific, incorporated in January 2020, has a staff count of up to 10, with an office in Robinson Road, based on information from the Singapore Fintech Association.
Mr Hayden Hughes, chief executive of trading platform Alpha Impact, told The Straits Times that Genesis’ Singapore arm handled lending on behalf of the parent company.
Singapore users, he said, would have faced the Singapore entity and he thinks “it’s still potentially a tricky situation for Singaporeans”.
“The Singapore entity is not technically bankrupt, but if there was commingling of funds then Singapore users could be affected by this,” Mr Hughes said.
The Winklevoss brothers’ platform, Gemini Trust Co, has suspended withdrawals from its Earn programme after partner Genesis Global Capital did the same. This is a scheme where investors may choose to lend crypto to certain institutional borrowers to earn interest.
In an e-mail seen by ST, Gemini said it is not able to meet customer redemptions within the agreed five business days. It added that “this does not impact any other Gemini products and services”.
Gemini’s Singapore entity, Gemini Trust Company, is applying for a licence in Singapore. In the meantime, it is allowed to offer crypto services under an MAS exemption from holding a licence under the Payment Services Act.
Genesis’ parent company is Digital Currency Group (DCG), a venture capital firm that owns crypto asset manager Grayscale. Other portfolio firms listed on its website are exchange Coinbase, wallet Circle and media outfit CoinDesk.
The group said on Twitter on Wednesday that the withdrawal halt at Genesis “has no impact on the business operations of DCG and our other wholly owned subsidiaries”.
Last week, it said Genesis Trading’s derivatives business has about US$175 million in locked funds on FTX.
