The list keeps growing. Genesis Trading has just announced that it is also exposed to FTX and that $175 million in funds are stuck on the platform. However, the subsidiary of Digital Currency Group (DCG) claims that “this has no impact on operations”.
Genesis Trading blocked on FTX
This is a name that comes up often in this kind of business. After losing over $1 billion to Three Arrows Capital (3AC), Genesis Trading announcement today also be exposed to FTX’s fall.
In the interest of transparency, the Digital Currency Group subsidiary specializing in digital asset trading revealed that its derivatives business has $175 million unlocked on the FTX platform. This announcement comes just hours after it claimed to have disclosed only up to $7 million in this case.
As part of our goal to provide transparency around this week’s market events, the Genesis derivatives business currently has ~$175M in locked funds in our FTX trading account. This does not affect our market-making activities.
— Genesis (@GenesisTrading) 10 November 2022
It is not the first nor is the latest entity to announce its exposure to FTX. Yesterday, venture capital firm Sequoia Capital announced that its $214 million investment in FTX was now worth nothing. Other companies should soon follow suit.
At the time of writing these lines, BlockFi also published a press release to announce the suspension of activities – and therefore withdrawals – pending more clarity on the future of FTX.
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Genesis Trading claims to be secure
However, Genesis Trading wanted to clarify that “it has no influence on the activities”. These positions on FTX actually do not “are not important to the activity” and “will not disrupt the full operation of our trading franchise”.
This still needs to be proven. As a reminder, Genesis Trading had to appeal to its parent company, Digital Currency Group, to absorb losses of a billion dollars after the 3AC affair. It is not excluded that a similar scenario takes place, if DCG still has the will to save its subsidiary.
In fact, the trading company claims has printed record volumes previous days, explains that the users choose to address them when the cryptocurrency market faces a period of volatility.
However, the activity report for the third quarter does not point in this direction at all. On the contrary, Genesis business down 75% compared to the same period last year, falling from $11.1 billion to just $2.8 billion.
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Source: Genesis Q3 Report
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