Coinbase and Robinhood, two other exchanges that sell cryptocurrencies, saw their shares fall on Wednesday as the collapse of FTX impacted smaller competitors.
Shares of Coinbase (COIN) fell by as much as 12.77% on Wednesday while Robinhood (HOOD), a brokerage that also sells stocks declined by 7.49%.
The insolvency of FTX has impacted the industry as several crypto exchanges and lenders face severe liquidity issues, including brokerage Genesis who is reassuring people that its operations are still solvent.
Gemini, the exchange founded by the Winklevoss brothers, is also attempting to calm crypto investors. The cryptocurrency exchange said on Wednesday that it would halt withdrawals on its Earn accounts that provide interest. The lending partner for the Earn accounts is Genesis.
“We are aware that Genesis Global Capital, LLC (Genesis) — the lending partner of the Earn program — has paused withdrawals and will not be able to meet customer redemptions within the service-level agreement (SLA) of 5 business days.,” Gemini said.
Crypto exchange Genesis confirmed on Wednesday that it has stopped customers from making withdrawals and issuing new loans, the latest company to be severely impacted from the collapse of FTX.
'Difficult Decision'
The brokerage told TheStreet in an email that it's "number one priority is to serve our clients and preserve their assets," a spokesperson said.
"Therefore, we have taken the difficult decision to temporarily suspend redemptions and new loan originations in the lending business," Genesis said. "We are working diligently to shore up the necessary liquidity to meet our lending client obligations."
The division that has halted the withdrawals is Genesis Global Capital, which works with institutional clients and had $2.8 billion in total active loans as of the end of the third quarter of 2022.
Genesis said it has three primary business lines: spot and derivatives trading, lending and borrowing, and custody.
"Our spot and derivatives trading and custody businesses remain fully operational," the company spokesperson added.
Genesis said via Twitter it is working on a plan for its lending business such as injecting new capital that will be announced next week.
"We have hired the best advisors in the industry to explore all possible options," the company tweeted. "Next week, we will deliver a plan for the lending business. We’re working tirelessly to identify the best solutions for the lending business, including among other things, sourcing new liquidity."
The company reinforced that Genesis Global Trading, its broker/dealer that holds its BitLicense, is "independently capitalized and operated – and separate from all other Genesis entities," in a tweet.
Genesis faces major losses when Three Arrow Capital, which is also known as 3AC, became insolvent in May.
The crypto company filed a $1.2 billion claim in bankruptcy court.
Genesis does not have any outstanding liabilities linked to Three Arrows Capital.
FTX said in a court filing that it could have as many as one million investors who are seeking to recoup their losses.
The Bahamian-based brokerage filed for bankruptcy after facing massive liquidity issues when its acquirer, Binance, backed out of a merger.
