The list keeps growing. Genesis Trading just announced that it is also exposed to FTX and has tied up $175 million in funds on the platform. However, the subsidiary of Digital Currency Group (DCG) states that “this has no impact on the business”.
Genesis Trading blocked on FTX
This is a name that often appears in this type of business. After losing more than $1 billion to Three Arrows Capital (3AC), Genesis trade announcement today also exposed to the fall of FTX.
In the interest of transparency, the Digital Currency Group subsidiary, which specializes in trading digital assets, has revealed that its derivatives business has $175 million locked into the FTX platform. This announcement comes just hours after it was claimed to have been exposed to just $7 million in this case.
As part of our goal to provide transparency around this week’s market events, Genesis derivatives trading currently has ~$175M in escrow funds in our FTX trading account. This does not affect our marketing activities.
— Genesis (@GenesisTrading) November 10, 2022
It’s not the first nor the last entity to announce its exposure to FTX. Yesterday, venture capital firm Sequoia Capital announced that its $214 million investment in FTX was now worthless. Other companies should soon follow suit.
Furthermore, at the time of writing these rules, BlockFi issued a press release to announce the cessation 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 does not affect the activities”. Indeed, these positions on FTX do not “are not important to the activity” and “will not interfere with the full operation of our trading franchise”.
This has yet to be proven. As a reminder, Genesis Trading had to rely on the parent company, Digital Currency Group, to absorb losses of a billion dollars after the 3AC affair. A similar scenario cannot be ruled out, if DCG still has the will to save its subsidiary.
Indeed, claims the trading firm have printed record volumes on previous days, explaining that users choose to turn to them when the cryptocurrency market enters a period of volatility.
However, the Q3 activity report does not point in that direction at all. On the contrary, Genesis business down 75% compared to the same period last year, fell from $11.1 billion to just $2.8 billion.
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Source: Genesis Q3 report
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