By
Chimamanda U. Martha
April 19th, 2024
Recent announcement by the lending arm of the crypto investment bank Genesis Global suggests that FTX contagion may be in full effect.
Like many other crypto-based firms, Genesis has had to make little adjustments to some of its product offerings in the wake of the recent FTX collapse. The bank announced via a Wednesday post on Twitter that it would be putting a hold on all loan applications at the time. According to the lender, this is in a bid to serve its clients better and help them scale through the difficult market situation.
Gemini, Others Follow Genesis to Make Big Announcements after FTX Collapse
Meanwhile, in a similar move to that of Genesis, the Gemini exchange has also announced that it will halt withdrawals on its interest-bearing Earn accounts. The development, however, may be understandable given that Genesis is the leading partner of the program.
But Gemini was clear to mention that the development will not affect any of its other products and services.
Meanwhile, in an interesting twist, reports have also begun seeping through that Gemini recently experienced a service outage. However, the firm confirms that work is currently ongoing to restore the exchange. This is even as it is also working with the Genesis team to help customers redeem their funds from the Earn program.
Is Contagion Already in Effect?
The recent decision of Genesis and others to suspend loan originations and redemptions point to the fact that an FTX contagion might already be playing out.
Recall that just as Gemini is currently doing, BlockFi also earlier paused customer withdrawals. But right now, BlockFi may be filing for bankruptcy any time soon, as earlier reported by Coinspeaker.
Although the full extent of the impact of FTX’s collapse remains to be seen, it certainly has begun.
Sam Bankman-Fried’s crypto exchange FTX filed for Chapter 11 bankruptcy protection in the US last Friday. The company had gone from a valuation of $32 billion to bankruptcy in a matter of few days. But going by a recently-updated version of its filing, FTX may have well over 1 million creditors. This hints at an unimaginable amount of potential victims — including individual investors and firms, of the FTX collapse.