The worst year in cryptocurrency history could get even more complicated.
After the fall of the second largest exchange center for this type of asset, the
FTX
exchange
, due to a liquidity crisis, the fear of analysts and investors is now that there will be
a contagion effect
to the rest of the industry.
Everything indicates that it is already happening and that the next piece to fall could be
the Genesis investment bank in cryptocurrencies
.
The bank, which is part of the Digital Currency Group (DCG), has a division focused on cryptocurrency lending that would have been affected by the fall of FTX.
The division, Genesis Global Capital, had more than $2.8 billion in active loans
at the beginning of the month
.
The company works somewhat like a conventional bank: it allows people with large cryptocurrency reserves to deposit their fortune and makes loans with them to financial institutions interested in having this type of product in their portfolio.
The fall of FTX and the collapse of cryptocurrencies in general this year, however, has left the group exposed.
On November 16, it announced that the clients of the loan unit
will not be able to temporarily withdraw their money
until the liquidity problem is solved.
"This decision has been made in response to the extreme market situation and the loss of confidence in the industry that has been caused by the implosion of FTX," said
Amanda Cowie
, DCG's vice president of communications and marketing.
The decision has blocked the collateral reserves of many clients with credit lines in Genesis.
Since then, Genesis has tried to find investors
willing to inject capital into the company so that it can continue to operate
.
"We have hired the best advisors in the industry to explore all possible options," they explained from the company.
But so far these advisers have not been very successful.
One of the companies contacted has been Binance, the largest cryptocurrency
exchange
in the world.
Binance was the company that rejected the purchase of FTX
in extremis
, a move that could have helped stabilize the market but which Changpeng Zhao, the company's CEO, considered
unwise given his rival's balance sheet
.
Since then, Zhao has tried to find cryptocurrency or blockchain companies and projects to support them in case they run into liquidity problems.
Genesis has also tried to convince Apollo Global Management, the US investment fund that took over the Santander real estate company, Altamira, and the EVO bank in 2013.
Neither of these two firms seems to be willing to rescue the entity, which
has triggered rumors of a possible bankruptcy
.
Sources from the cryptocurrency portal
The Block
have revealed that the company was seeking $1 billion to meet its obligations, but has recently lowered the amount to $500 million.
The feeling of uncertainty has once again hit the price of the main cryptocurrencies that have already caused huge losses so far this year due to different scandals and scams.
Bitcoin reached a price of around 15,200 euros a few hours after the Genesis financing problems were known,
63% less than what it was worth at the beginning of this year
.
Analysts and experts warn that the bankruptcy of the division would in turn affect other projects and companies that depend on the capital of Genesis for their operations.
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