Genesis Trading has revealed that it was exposed to FTX, with $175 million locked away in an FTX trading account.
Genesis Reveals Locked-In Funds
Crypto trading firm Genesis has disclosed that around $175 million of its funds are locked away in an FTX account. The company disclosed this news on Twitter in an attempt to maintain transparency. The Twitter post also clarified that Genesis’s operating capital and net positions in FTX are not material to their business operations. Finally, the statement also revealed that the trading broker has no ongoing relationship with either FTX or Alameda Research. The latter is a crypto trading firm belonging to FTX CEO Sam Bankman-Fried.
Genesis had previously been exposed to the now-defunct crypto exchange Three Arrows Capital (3AC). On that occasion, the company suffered deeply due to its locked-in funds in 3AC, and its parent company, Digital Currency Group, had to intervene to assume some of the liability owed by 3AC to ensure that Genesis had adequate capital for its operations.
Is Genesis Okay?
It remains to be seen whether Digital Currency Group will have to intervene again, even though Genesis has claimed that its capital and positions will not affect its trading operations. Genesis claims that it had made record volumes of trade during the FTX fallout and that investors consider it a safe bet during volatile market conditions.
The company tweeted,
“Our business ops, including lending and trading across spot and derivatives, continue to run normally and our balance sheet remains strong. Yesterday was a top 5 volume day for our derivatives business as clients turn to us during volatile market conditions to manage their risk.”
However, despite these claims, it is worth noting that the company’s active loans have dropped by around 75% during the latest crypto winter, as the company’s Q3 report reveals that its current outstanding active loans are only worth $2.8 billion, compared to last year’s $11.1 billion.
What’s Next For FTX?
Not just Genesis but many other businesses have come out to refute any ongoing relationship with FTX and Alameda Research. Tether, Circle, Kraken, and Coinbase have all distanced themselves from the two businesses. With FTT losing all its value overnight and Binance backing out of the deal, founder Sam Bankman-Fried has been assessing all his other options. FTX has been exploring every possible avenue to raise about $9.4 billion from its investors and rivals.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Sourced from cryptodaily.co.uk.
Written by Amara Khatri on 2022-11-11 13:30:00.