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 Digital Currency Group (DCG) subsidiary, however, says that “this has no impact on operations”.
Genesis Trading blocked on FTX
That’s a name that comes up a lot in these kinds of cases. After losing more than $1 billion to Three Arrows Capital (3AC), Genesis Trading announced today that it is also exposed to the fall of FTX.
In an effort to provide transparency, the digital asset trading subsidiary of Digital Currency Group revealed that its derivatives business had $175 million locked up on the FTX platform. The announcement comes just hours after it claimed to have only $7 million of exposure in the matter.
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
This is neither 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 are likely to follow suit.
Indeed, at the time of writing, BlockFi issued a statement announcing the suspension of operations – and therefore withdrawals – pending further clarity on the future of FTX.
Genesis Trading says it is safe
However, Genesis Trading was keen to clarify that “this has no impact on the business”. Indeed, these positions on FTX are “not material to the business” and “will not impede the full operation of our trading franchise”.
This has yet to be proven. As a reminder, Genesis Trading had to call on its parent company, Digital Currency Group, to mop up the billion dollar losses following the 3AC affair. It is not excluded that a similar scenario will take place, if DCG still has the will to save its subsidiary.
Indeed, the trading firm claims to have printed record volumes over the previous days, explaining that users choose to turn to them when the cryptocurrency market faces a period of volatility.
However, the third quarter business report does not support this at all. On the contrary, Genesis’ business dropped by 75% compared to the same period last year, from $11.1 billion to just $2.8 billion.
