Home » FTX fallout hits crypto lender Genesis; Bankman-Fried, celebs sued

FTX fallout hits crypto lender Genesis; Bankman-Fried, celebs sued

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Nov 16 (Reuters) – Major cryptocurrency player Genesis Global Capital on Wednesday suspended customer redemptions in its lending business, citing the sudden failure of cryptocurrency exchange FTX. Meanwhile, court documents showed that FTX founder Sam Bankman-Fried faces legal action.

FTX filing for bankruptcy Traders withdrew $6 billion from the platform in three days and were protected in the US’ most high-profile cryptocurrency explosion ever on Friday after rival exchange Binance abandoned bailout deals. After a series of tweets and interviews by Bankman-Fried, FTX said he “does not have an ongoing role” with the company and will not speak on behalf of the company.

FTX’s implosion has rippled through the industry, sapping liquidity for what was once one of the world’s largest cryptocurrency exchanges. Regulatory investigation in some countries.

Members of Congress Wednesday planning public hearing By the end of the year, on FTX, the New York Financial Services Authority said it was monitoring the Genesis situation.

Treasury Secretary Janet Yellen, who did not directly name FTX, said Wednesday: Need more effective monitoring It urged Congress to act quickly over the crypto market to address previously identified risks “at the heart of the crypto market stress observed over the past week.”

Digital Currency Group, the venture capital firm that is the ultimate parent of Genesis and the parent of crypto asset manager Grayscale, tweeted that Genesis’ decision to suspend redemptions was a sign of “extreme market turmoil. “It was done in response to the loss of confidence in the industry caused by the financial crisis.” FTX Implosion. ”

Genesis, which also offers cryptocurrency trading and custody services through its unaffected affiliates, had active loans totaling $2.8 billion at the end of the third quarter. company websiteLast year, the company provided $130.6 billion in cryptocurrency loans and traded $116.5 billion in assets, the company said.

The suspension at Genesis “will not impact the business operations of DCG and its other wholly-owned subsidiaries,” the company said.

Still, Grayscale Bitcoin Trust (GBTC.PK), World’s largest Bitcoin fundplunged almost 7% on Wednesday, while bitcoin’s price fell 2.6% to $16,400, down almost 20% this month.

Cryptocurrency exchange Gemini, founded by the Winklevoss twins, said its yield-generating ‘Earn’ program, which uses Genesis as a lending partner, cannot meet customer redemptions.

Several other cryptocurrency companies, including Crypto.com and stablecoin Tether, said Wednesday they had no contact with Genesis.

Genesis is You’re Not Alone Facing Fallout From the collapse of FTX.

Crypto lender BlockFi, which previously admitted to having significant exposure to FTX, plans to lay off workers as it prepares to file for bankruptcy, The Wall Street Journal reported Tuesday. rice field.

Within the industry, some executives considered the potential for further ramifications.

Jeff Howard, head of institutional sales at the Hong Kong-based firm, said: “I think there will be another washout of cryptocurrencies, but they have been burned by failing to diversify their assets. It will be a less well-capitalized cryptocurrency player.” Digital Exchange OSL.

“The cryptocurrency ecosystem is intertwined in ways that will soon lead to further contagion. The risk of cryptocurrency contagion is still rising,” said managing director of electronic trading at prime brokerage firm Clear Street. added Joe Urban.

legal action

On the other hand, filings with US courts Indicated Bankman-Fried is facing lawsuits in the United States from investors who allege that the company’s yielding cryptocurrency accounts violate Florida law.

A proposed class action lawsuit filed in Miami late Tuesday alleges that FTX yield accounts are unregistered securities illegally sold in the United States.

lawsuit seek damages from several celebrities People who helped promote FTX include National Football League quarterback Tom Brady and tennis star Naomi Osaka.

Representatives for Bankman-Fried, Brady and Osaka did not immediately respond to requests for comment.

Authorities in the United States and the Bahamas were discussing the possibility of bringing Bankman-Fried to the United States. interrogationBloomberg reported on Tuesday.

However, Bahamas Police Commissioner Clayton Fernander said Wednesday as a bystander at a police conference in Nassau that police did not interview or meet Bankman-Fried, and Fernander said the United States has not been involved in the matter. He said he had not been in contact with authorities. matter.

liquidator spat

FTX Group’s liquidation comes as liquidators of the Bahamas-based exchange filed a Chapter 15 petition in the U.S. Bankruptcy Court in New York late Tuesday, questioning the validity of U.S. bankruptcy proceedings. It has been the subject of controversy.

The liquidators, appointed by a Bahamian judge on November 10, have been authorized to initiate bankruptcy proceedings for FTX and its affiliates, as their filing predates FTX’s bankruptcy filing in the United States. They said they were the only ones who were killed.

More than 100,000 and in some cases more than 1 million FTX Group companies have been involved in U.S. bankruptcy proceedings. a creditor.

Reporting by Arun John and Elizabeth Howcroft of London, Hannah Lang and Chris Prentice of Washington, John McCrank, Dietrich Nout and Carolina Mandl of New York, Jasper Ward of The Bahamas, and Menaz Yasmin of Bengaluru Lannan Edited by Nguyen, Jane Merriman and Matthew Lewis

Our criteria: Thomson Reuters Trust Principles.

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