Introduction: Strategic Measures Following Market Turmoil
In a decisive move to bolster its position amidst ongoing market turbulence, Genesis Trading announced on November 10 that it will receive an additional equity infusion of $140 million from its parent company, Digital Currency Group (DCG). This infusion aims to strengthen the company’s balance sheet and enhance its status as a global leader in cryptocurrency capital markets.
Equity Infusion Details
Genesis Trading expressed its confidence that this equity infusion would enable the firm to better support its clients and meet the growing demand for its services. This information was detailed in a letter sent to clients, which was later shared by Wu Blockchain on Twitter:
“Genesis sent letters to clients stating that it had obtained an additional equity infusion of $140M from parent company, Digital Currency Group.”
Impact of FTX Bankruptcy
As part of its ongoing challenges, Genesis revealed that its derivatives business had approximately $175 million locked in an FTX trading account prior to the exchange’s bankruptcy filing. Despite FTX facing a severe liquidity crisis, Genesis reassured its clients that the locked funds would not impede its market-making activities.
“This does not impact our market-making activities,” Genesis stated in a tweet shortly after the announcement.
Clear Position on Relations with FTX and Alameda
Genesis took further steps to assure clients of its financial stability by emphasizing that it has “no ongoing lending relationship with FTX or Alameda.” In light of recent events that have rattled the cryptocurrency ecosystem, numerous firms including Tether, Circle, Kraken, and Coinbase have publicly stated that they are not exposed to the fallout stemming from FTX’s collapse.
Past Exposure to Three Arrows Capital
In July, Genesis Trading was significantly affected by its exposure to the now-defunct Singaporean crypto hedge fund, Three Arrows Capital (3AC). Former CEO Michael Moro disclosed that the firm managed to mitigate its losses after 3AC failed to meet a margin call on borrowing from Genesis. The history of such exposure has contributed to the current market hesitance and scrutiny faced by lending firms.
Conclusion: A Step Toward Recovery
The equity infusion from Digital Currency Group reflects Genesis Trading’s proactive approach to navigating a difficult market landscape. As firms across the crypto industry brace for the fallout of the FTX crisis, Genesis is working hard to reassure its clients and stabilize its operations. The move is indicative of an industry striving to adapt and recover from unprecedented challenges in the wake of significant operational failures.
