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. The subsidiary of Digital Currency Group (DCG), however, claims that “this has no impact on the activities”.
Genesis Trading blocked on FTX
This is a name that often comes up in this kind of business. After losing over $1 billion to Three Arrows Capital (3AC), Genesis Trading announcement today also be exposed to the fall of FTX.
In the interest of transparency, the Digital Currency Group subsidiary specializing in digital asset trading, revealed that its derivatives business has $175 million locked up on the FTX platform. This announcement comes just hours after claiming to be exposed only up to 7 million dollars in this case.
As part of our goal in providing 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 impact our market-making activities.
— Genesis (@GenesisTrading) November 10, 2022
It’s not the first, nor 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.
Moreover, at the time of writing these lines, BlockFi 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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However, Genesis Trading wanted to clarify that “it has no impact on the activities”. Indeed, these positions on FTX do not “are not important for the activity” and “will not interfere with the full operation of our trading franchise”.
This still remains 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 following the 3AC affair. It is not excluded that a similar scenario takes place, if however DCG still has the will to save its subsidiary.
Indeed, the trading firm claims have printed record volumes on previous days, explaining that users choose to turn to 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 fell 75% compared to the same period last year, dropping from $11.1 billion to just $2.8 billion.
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Source: Genesis Q3 Report
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