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Cryptocurrency lending company Genesis Trading is facing hundreds of millions of dollars in losses due to a “whirlpool of death” called Three Arrows Capital.
The losses at Genesis Trading were largely related to exposure to the investment fund Three Arrows Capital and Hong-based crypto lender Babel Finance, according to an insider source disclosed on June 29. Kong. Damage is said to be in the hundreds of millions of dollars.
The above fall comes as the collapse of the Three Arrows Capital (3AC) fund sent shockwaves through the crypto lending industry, with many companies facing significant losses due to their exposure to the fund. . Meanwhile, Babel Finance still has not been able to come up with a satisfactory solution, many top leaders have left the company despite user money still stuck on the platform.
Besides, the source also said that Genesis Trading is looking to repay at least part of the money to its partners and some of the losses may have been covered by hedging. Amid such uncertainty, Genesis has even drawn lines of credit from its various relationships.
Genesis Trading CEO Michael Moro said:
“As we stated on June 17, the company has taken a mitigation measure against a major partner who failed to respond to our margin call. We sold our collateral, hedging, and went into business as usual. Currently Genesis Trading is trying to meet all the needs of customers.”
4/We will actively pursue recovery on any potential residual loss through all means available, however our potential loss is finite and can be netted against our own balance sheet as an organization. We have shed the risk and moved on.
— Michael Moro (@michaelmoro) June 17, 2022
The impact from Three Arrows Capital in particular has had a wide and severe impact on the entire crypto industry to date. The proof is that the Voyager Digital platform has seen its stock plummet and was forced to restrict customers’ withdrawals when it claimed 3AC “failed” more than $ 662 million. Other prominent names like BlockFi or Babel Finance are also facing similar challenges.
Interestingly, the chain effect of the collapse of lending and 3AC platforms has created great conditions for FTX CEO Sam Bankman-Fried to make many “opportunistic” investments in BlockFi as well as Voyager Digital, with valued at $250 million and $485 million, respectively. Besides, FTX quickly sat down at the negotiating table to buy back BlockFi shares, a move that caused investment funds to rush to raise capital to prevent this ambition of FTX.
In fact, Genesis Trading has more than 44.3 billion USD in loans in the first quarter of 2022. Despite the difficulties at the moment, there has been a lot of speculation that Genesis Trading’s parent company is Digital. Currency Group – the crypto group that owns the largest global crypto investment fund Grayscale can spend about 1 billion USD to help Genesis Trading overcome “this shock”.
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