Genesis Trading, Silvergate Bank, and Coinbase Bonds Watched by Traders
The crypto space is in total chaos and unpredictability. The FTX debacle has put a significant spotlight on space. Genesis Global Capital, the biggest trading desk for professional investors in cryptocurrency markets, announced it would halt client withdrawals. The company is facing a liquidity crisis.
“Following the implosion of FTX and the locking up of over $175 million, Genesis’s lending arm faces a liquidity crisis and is actively seeking new capital,” Bitcoin Magazine reported.
Genesis has paused withdrawals and loan applications, read a tweet from Genesis Trading.
Some say Genesis is next on the chopping block.
Genesis needed a $1 billion liquidity injection by today, Nove. 21, and word is still out if it has been bailed out. According to Axios, there has only been “silence” from the company, which “spooks crypto.”
Why is so much weighing on what happens with Genesis? Genesis Trading, which had $50 billion in loan originations in one quarter and a $12.5 billion active loan book at the market’s peak in 2021, represents the” backbone infrastructure of the institutional investor base in the bitcoin and broader crypto markets. For lending, trading, hedging, exchange yields, and more, Genesis Trading was the brokerage to facilitate all this activity in the space,” Bitcoin.com reported.
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Things are shaky for Silvergate Bank as well. Silvergate is the leading bank for innovative businesses in fintech and cryptocurrency. The FTX fallout has been “painful” for Silvergate, but Silvergate said its exposure to FTX is minimal and total deposits stemming from this area are “less than 10%,” GuruFocus reported. The company insists that the FTX bankruptcy won’t be its downfall, as it has never had any outstanding loans or investments related to cryptocurrency, nor does it act as a custodian for any of the bank’s bitcoin-collateralized SEN leverage loans.
It did, however, see its value dropping more than 50% in just one month, GuruFocus reported.
Meanwhile, Coinbase bonds have tanked since news of FTX failure was reported.
Coinbase’s bond due 2031 has dropped 15 percent this month to 50 U.S. cents on the dollar, according to data source Finra-Morningstar, sending the yield to a record high of 13.5 percent.
All might not be lost. “Especially for Coinbase, there is an argument that it benefits from FTX’s demise, solidifying their position in the U.S. So the narrative is improving on a micro level, whereas the crypto credit environment has deteriorated,” Rich Rosenblum, co-founder of crypto trading firm and liquidity provider GSR told CoinDesk.
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