[Asia Economy New York=Special Correspondent Joselgina] The bankruptcy filing of FTX, one of the world's top three cryptocurrency exchanges, is shaking the entire market. Amid ongoing bank runs, companies including major lending firm Genesis Trading have also simultaneously halted new loans and redemptions.
According to economic media CNBC and others, Genesis Trading announced on the 16th (local time) via its official Twitter that "our priority is to provide services to customers and preserve assets," adding, "After consulting with professional financial advisors, we are temporarily suspending new loans and redemptions."
This emergency decision was made due to abnormal withdrawal requests following the FTX incident, which exceeded liquidity. Earlier, Genesis Trading revealed that $175 million was tied up in FTX accounts. It appears that customers, fearing insolvency, attempted to withdraw funds, leading to this situation. Genesis Trading plans to disclose solutions for new liquidity next week.
On the same day, cryptocurrency exchange Gemini also suspended customer fund repayments. Gemini was founded by the billionaire Winklevoss twins, Harvard graduates. Through its interest payment program called "Gemini Earn," it cooperates with Genesis, but with Genesis deciding to temporarily halt redemptions, Gemini appears to have taken similar measures. Gemini stated, "We will work with Genesis to ensure customers can repay their funds as soon as possible."
Crypto lending firm BlockFi also halted customer withdrawals amid a liquidity crisis. The Wall Street Journal (WSJ) reported, "BlockFi is preparing to file for bankruptcy," noting "significant exposure to FTX and others." Currently, BlockFi is reportedly planning large-scale layoffs in preparation for bankruptcy filing. Earlier, in June, BlockFi requested industry funding due to declines in cryptocurrency prices including Bitcoin, and it was confirmed that FTX supported them through revolving credit at that time. Additionally, Voyager Digital, a crypto brokerage and lending firm that FTX had announced plans to acquire, is now in a position to seek another buyer.
Bloomberg News reported, "The rapid collapse of FTX is spreading its impact across the entire cryptocurrency market," "stating, "The cryptocurrency world, which had ballooned by lending digital assets under the banner of decentralization, is now facing a major challenge triggered by the collapse of FTX." The price of Bitcoin, which exceeded $60,000 last year, has now fallen to around $16,000.
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