DeFi
Yield-farming program Gemini Earn halted withdrawals last week after a bank run on lender Genesis Global Capital.
It’s flu season for crypto
Gemini Earn, the Gemini exchange’s yield farming program, halted withdrawals last week and caused a bank run on Gemini exchange’s regular deposits. Gemini retained Genesis Global Capital to manage client funds for its earn program.
Genesis Global Capital is a New York-based crypto lending service provider used by institutions and major exchanges. In a September 2022 filing, Genesis claimed that it owned $2.8 billion worth of crypto deposited by its customers. Genesis is owned by Digital Currency Group (DCG), the parent company of Grayscale, the pseudo-ETF holding $11 billion worth of BTC, and CoinDesk, the news outlet that announced FTX’s bankruptcy.
After FTX halted withdrawals following its own bank run, Genesis announced that $175 million of its customers’ funds were tied up with FTX. DCG apparently injected $140 million into Genesis, but that obviously wasn’t enough to cover the bank run on Genesis’ clients. Rumor has it that Genesis took out a $1 billion loan Monday night.
It’s still not entirely clear where everyone’s money is, but things aren’t looking good for Genesis’ client institutions. Following the news of Gemini Earn’s troubles, Gemini had its own bank run with net outflows of nearly $500 million in one day. Gemini released a statement apologizing for the bad things and complaining that Genesis could not meet the terms of its SLA. Gemini claims his exchange is solvent.
GOPAX, a major South Korean exchange, saw the Genesis troubles coming, but it didn’t save its clients’ money. GOPAX used Genesis for its GOFi yield farming program, and before Genesis broke up, GOFi had already reclaimed its customer funds. Unfortunately Genesis was secretly dead and now the GOFi money is gone too. What’s crazy is that DCG is GOPAX’s largest investor, and not even that helped in the end.
So, we look at a possible market-wide crypto meltdown set in motion by DCG subsidiary CoinDesk, which may have killed DCG subsidiary Genesis Global Capital, which in turn may have killed DCG’s South Korean exchange, GOPAX. DCG’s grayscale funds are also way down. Until the next bull run, DCG.
Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers
Comments are closed.