Genesis Halts Withdrawals Amid a Collapse of The Digital Currency Market
Genesis Global Capital has stopped processing withdrawals, confirming this week’s rumors. This is the most current lending program to file for bankruptcy. In 2022, Celsius Network, Voyager Digital, and other companies did so.
At the moment, Derar Islim is Genesis’ acting CEO. Islim told Investors that the firm is looking at its options and seeking new funding sources. However, he acknowledged that FTX’s demise resulted in a surge of withdrawals that Digital Currency Group could not match.
Genesis said on Twitter that although trading and custody were not affected, their loan operation was.
The FTX Fiasco Is Still Causing Mayhem in The Sector
The week prior, Sam Bankman-Frieds’ Alameda Research and FTX exchange also crashed. So, people have been speculating about whose dominoes will fall next. The last time this occurred, Three Arrows Capital’s collapse was followed by Celsius Network’s and Voyager Digital’s demise. The admission by Genesis now gives the impression that an exact situation is likely to occur soon.
However, concerns about BlockFi and specific exchanges are approaching. Will this ultimately lead to the collapse everyone has been expecting—including CoinGeek—for years? .The Genesis finding will simply speed up the surge of client withdrawals; that is the core of the problem.
Confidence will undoubtedly decline if the industry’s second-largest exchange disappears overnight. Time will only tell.
What Does This Indicate for The More Significant Market for Digital Currencies?
It’s possible to make educated predictions about what this implies for the sector’s future. The chance exists that the contagion might first spread to other areas. FTX’s bankruptcy caused Galaxy Digital and Tether to lose money, despite their claims that they won’t be affected.
Business executives often make false or misleading statements to reassure traders and investors. Even if BlockFi and Crypto.com survive, other businesses are probably getting ready to declare bankruptcy.
Second, authorities may expedite the creation of sector laws and regulations. Hester Peirce, an SEC commissioner, told Bloomberg that she is unhappy with how the agency has handled the situation thus far. Pressure will be on authorities to act more quickly as more investors lose money to fraud and crime.
In the end, and probably most significantly, customer confidence in the industry will keep declining. Big institutional investors will soon realize how easy it is to wipe out their whole portfolios in this market.
As a consequence, they will relocate their capital investments. Longtime BlockFi supporters Anthony Pompliano and Peter McCormack will lose credibility. Many people will also doubt their narrative.
If the collapse is severe enough, it will be difficult to ignore the errors in the dominant corporate narratives.