Genesis' crypto lending (Genesis Global Capital) halts withdrawals

[NeuroticFish]

And the shit show started by FTX is going further:

The lending arm of crypto investment bank Genesis Global Trading is temporarily suspending redemptions and new loan originations in the wake of FTX’s collapse, Interim CEO Derar Islim told customers on a call Wednesday.
The unit, known as Genesis Global Capital, serves an institutional client base and had $2.8 billion in total active loans as of the end of the third quarter of 2022, according to the company’s website.

And this goes further. According to Bitcoin Magazine, Gemini Earn customers are affected by Genesis' problem:

BREAKING: Gemini Earn customers unable to redeem funds as Genesis lending halts withdrawals

I guess that it's expected that this castle made of cards will make other similar castles collapse....

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[Don Pedro Dinero]

I just talked about it in our local forum. The bad thing about this is that the worst omens come true. Will anyone be surprised if 2 or 3 more fall little by little? The price will easily go to 15 and 12k, hopefully not much more.

If we try to take an optimistic view, this will teach people to guard their own bitcoins, their own private keys but I doubt it if we are talking about most people, and if that was the case, forget about overwhelming price rises for the next cycles, as the mass trading facilitated by the exchanges was largely responsible for the price rises, just as their collapse is now responsible for the price falls.

[DaveF]

But on a bright note the Gemini credit card now give 10% back up gas and electric vehicle charging purchases up to the 1st $200 each month.

Back to the serious part of this, did anyone really ever believe those 8%+ returns or were people thinking that I'll get out before it implodes and takes everyone else money with it, but I'll get our on time?

Just about nobody ever does, everybody gets greedy and it all implodes around them. But, I wonder how many people really think that.

Also, as a thought, how many of these implosions are because they can. As in we are solvent and making money, but we can shutdown and run with the funds and get lost in the pile of everyone else doing the same thing.

-Dave

[Rikafip]

Back to the serious part of this, did anyone really ever believe those 8%+ returns or were people thinking that I'll get out before it implodes and takes everyone else money with it, but I'll get our on time?

I think that people seriously believed that all that return is simply coming from the profit those platforms make when they lend the money. Few of my friends that had money in Celsius answered me that when i asked how the hell are they making those returns. They really thought of those platforms as banks.

Also, as a thought, how many of these implosions are because they can. As in we are solvent and making money, but we can shutdown and run with the funds and get lost in the pile of everyone else doing the same thing.

Good point, this is a perfect time to do exit scam and disappear with money.

Will anyone be surprised if 2 or 3 more fall little by little? The price will easily go to 15 and 12k, hopefully not much more.

More lending services will probably go down but I don't expect them to affect bitcoin price significantly, if it affects at all. What could bring it downfew more thousands is if all those rumours about crypto.com being insolvent come true. Even though it doesn't maybe look like that, bitcoin price ain't that bad considering everything that has happened this year.

[Darker45]

I just talked about it in our local forum. The bad thing about this is that the worst omens come true. Will anyone be surprised if 2 or 3 more fall little by little? The price will easily go to 15 and 12k, hopefully not much more.

2 or 3 might be a very conservative prediction. BlockFi and Voyager are about to die, probably sooner rather than later. Well, they should have died a long time ago if not with SBF. But with SBF now hitting the bottom, these two will certainly fall. Except perhaps if somebody else is interested to acquire them. This sister company of Grayscale, Genesis Global Capital, might be the third one. There will surely be others. So there are probably more than 3. They're all definitely very busy right now controlling the damage caused by the fall of FTX to their companies.

$15,000 for Bitcoin is a big possibility. Although all these things that are happening with centralized platforms right now don't have anything to do with Bitcoin, I guess it can't be avoided that it's dragged down as well.

[Don Pedro Dinero]

More lending services will probably go down but I don't expect them to affect bitcoin price significantly, if it affects at all. What could bring it downfew more thousands is if all those rumours about crypto.com being insolvent come true. Even though it doesn't maybe look like that, bitcoin price ain't that bad considering everything that has happened this year.

I don't know where you get your optimism from. This cycle has been the worst ever in terms of returns at the peak of the cycle, and, as we can see now, at the bottom. In no previous cycle the price has fallen for so long below the price peak of the previous cycle.

Apart from the fact that we are at these levels and I don't see any reason for the price to go up significantly. Neither the situation of the economy in general is good, nor the situation of the crypto ecosystem is good either, because everyone is thinking about who is going to go bankrupt next. Money is very skittish, and as soon as it sees problems it runs away.

[mk4]

Another one bites the dust.

Isn't this a bigger deal though? As far as I know Genesis is sort of "partnered" with a good number of significantly-sized crypto platforms.

[PX-Z]

More lending services will probably go down but I don't expect them to affect bitcoin price significantly, if it affects at all.

Bitcoin and other alts will be affected from the fomo of closing/shutting down of these crypto related services since it catered not only those alts and tokens but bitcoin as well. But i hope not that much, we are already at $15k's doors so $14k can be a possibility too in the next few weeks.

[Rikafip]

I don't know where you get your optimism from. This cycle has been the worst ever in terms of returns at the peak of the cycle, and, as we can see now, at the bottom. In no previous cycle the price has fallen for so long below the price peak of the previous cycle.

Optimistic? Nope, at least not for all that DeFi shit that's going down one after another but I am not panicking and full of doom & gloom either (I do expect price to go down a little bit more though). Its just that with everything that has happened in the last six month. bitcoin price ain't that bad at all.

[DaveF]

Back to the serious part of this, did anyone really ever believe those 8%+ returns or were people thinking that I'll get out before it implodes and takes everyone else money with it, but I'll get our on time?

I think that people seriously believed that all that return is simply coming from the profit those platforms make when they lend the money. Few of my friends that had money in Celsius answered me that when i asked how the hell are they making those returns. They really thought of those platforms as banks.

But at least some of them were lending out funds within fractions of a percent of what they were giving in yields.
You cant charge 8.5% interest and pay people an 8% yield. That leaves no wiggle room. Heck that .5% in the real world does not even cover operating expenses.

Even at 1% it does not work. 1% of $10 billion dollars is $100 million and that is an astoundingly large amount of money. Until you hire a few hundred people for staff, pay rent, insurance, server & bandwidth hosting, etc... Even just 200 people at $50,000 a year is $10 million. Add in taxes and insurance and you can probably put another $4 to $5 million on top of that.

That math does not work.

It's why banks are now paying 3% or 4% on CDs but lending out money at 7%+ to well over 10%.

That's the way the math works.

-Dave

[stompix]

Back to the serious part of this, did anyone really ever believe those 8%+ returns or were people thinking that I'll get out before it implodes and takes everyone else money with it, but I'll get our on time?

Doesn't that sound like being the first client of a Ponzi scheme?
Be the first guy that gets that big APY before the company runs out of money since obviously, their whole business model is rotten to the core and nothing like what they are advertising?

I think that people seriously believed that all that return is simply coming from the profit those platforms make when they lend the money. Few of my friends that had money in Celsius answered me that when i asked how the hell are they making those returns. They really thought of those platforms as banks.

Same here, on paper everything was fine, you lend people money with higher interest than what you give to deposits, and you ask for a 150% -200% collateral for which you have enough liquidity in the markets to not have a problem if a dump happens.
But, turned out to be a completely different story and I stopped quite a while ago talking with my friends about crypto when they ask something about investments, I don't know a thing, I didn't hear a thing, I can't say a thing! I never gave advice, I don't plan on doing it!

Another one bites the dust.
Isn't this a bigger deal though? As far as I know Genesis is sort of "partnered" with a good number of significantly-sized crypto platforms.

Let's wait and see where it goes.
If it goes all the way up to the parent company Grayscale, then it's going to be a worse shitshow than FTX.
https://twitter.com/Grayscale/status/1592882143906111488

I did hear this kind of statement from quite a few bankrupt companies, but we might have reached the milestone where we finally have one saying the truth.

[dkbit98]

Optimistic? Nope, at least not for all that DeFi shit that's going down one after another but I am not panicking and full of doom & gloom either (I do expect price to go down a little bit more though). Its just that with everything that has happened in the last six month. bitcoin price ain't that bad at all.

I hope defi crap is done for good, but I have a feeling we are going to see something similar in next bull run, whenever that is.
Price of Bitcoin can certainly go much lower, but I know people are getting ready to load up again if it goes around 10k.

Doesn't that sound like being the first client of a Ponzi scheme?
Be the first guy that gets that big APY before the company runs out of money since obviously, their whole business model is rotten to the core and nothing like what they are advertising?

Banks are the ultimate Ponzi scheme, especially when you combine them with constant inflation and decreasing value of all fiat currencies.
But hey don't worry, they will soon ''reset'' everything with their new CBDC crap that is already rolling out in NY first phase experiment.
People should tell them FU and reject any tests with this new digital crap.

[Bitcoin_Arena]

So Gemini crypto exchange went offline yesterday following this tweet 



They claim that they experienced an Amazon Web Services EBS outage with one of their primary databases, the exchange was restored after sometime, but you can never trust what those folks say.

A huge outflow of coins and token from the exchange has been observed according to on chain data. Careful guys. Be on the safe side.

[mk4]

Optimistic? Nope, at least not for all that DeFi shit that's going down one after another but I am not panicking and full of doom & gloom either (I do expect price to go down a little bit more though). Its just that with everything that has happened in the last six month. bitcoin price ain't that bad at all.

How is this case "DeFi" though? FTX, Alameda, and Genesis Global Trading Inc are literally 100% centralized custodian companies that just went insolvent because of mismanagement (and shady stuff). Nothing much related to protocols here.

[Rikafip]

How is this case "DeFi" though?

You are right, I stand corrected.

[bbc.reporter]

Another one bites the dust.

Isn't this a bigger deal though? As far as I know Genesis is sort of "partnered" with a good number of significantly-sized crypto platforms.

There are some people who speculate that it might cause another market dump. According to some information being shared in social media, Genesis needs a loan of $1 billion for their cashflow. If they do not get the loan by next week and because Genesis is owned by DCG who also owns Grayscale, they will need to sell the bitcoins or the altcoins they have in their treasury. They have 600k bitcoins and 3.1 million ETH.

If DCG sells to save Genesis, it might dump the price lower than $16k.

Also, some of DCG's biggest debtors are Alameda Research and 3 Arrows Capital. DCG is also an investor in FTX. They have lost funds.

This is from Arthur Hayes after news about Genesis began circulating.



Y’all ready for this?
$BTC 10k my fiat is ready!!!

https://mobile.twitter.com/cryptohayes/status/1592876226632626176

[DaveF]

So Gemini crypto exchange went offline yesterday following this tweet 



They claim that they experienced an Amazon Web Services EBS outage with one of their primary databases, the exchange was restored after sometime, but you can never trust what those folks say.

A huge outflow of coins and token from the exchange has been observed according to on chain data. Careful guys. Be on the safe side.

The issue with Gemini going offline was related to AMZ, and places that rely on those kinds of hosted back ends, be it Microsoft, Amazon, Google, whatever. Will continue to see issues during spikes. Not because of anything evil, but due to the nature of their services.

Something like this happens.
The 'cloud based' back end should be able to ramp up to accommodate all the extra traffic.
BUT....
Every other crypto service that is also hosted in the 'cloud' that uses the same provider is also getting hit.
So, now everything is getting slow. Said provider is bringing things up and online as quick as can be done.
While other people are seeing the other serveries slow down and go offline they go and check on their accounts which adds more strain.
Service falls over....

And just to be clear, there is no such thing as the cloud, it's just hosting on someone else's servers.

-Dave

[uneng]

Back to the serious part of this, did anyone really ever believe those 8%+ returns or were people thinking that I'll get out before it implodes and takes everyone else money with it, but I'll get our on time?

I think that people seriously believed that all that return is simply coming from the profit those platforms make when they lend the money. Few of my friends that had money in Celsius answered me that when i asked how the hell are they making those returns. They really thought of those platforms as banks.

But at least some of them were lending out funds within fractions of a percent of what they were giving in yields.
You cant charge 8.5% interest and pay people an 8% yield. That leaves no wiggle room. Heck that .5% in the real world does not even cover operating expenses.

Even at 1% it does not work. 1% of $10 billion dollars is $100 million and that is an astoundingly large amount of money. Until you hire a few hundred people for staff, pay rent, insurance, server & bandwidth hosting, etc... Even just 200 people at $50,000 a year is $10 million. Add in taxes and insurance and you can probably put another $4 to $5 million on top of that.

That math does not work.

It's why banks are now paying 3% or 4% on CDs but lending out money at 7%+ to well over 10%.

That's the way the math works.

-Dave

The system could have worked if the CEOs and their teams weren't greedy scammers. Some of these platforms had billion of dollars on their wallets. 0,5% of a billion is enough money to cover operational costs of an online platform. Expenses shouldn't be that high, because they don't have physical agencies like traditional banks. Number of employees should also be reduced.

The proposal was to put the interests of the customers and investors above the interests of the businesses' owners. People expected individuals running those companies wouldn't set huge wages for themselves, but they were wrong. They were even greedier than banksters and completely messed up the ecosystem, especially due to schemes involving native tokens and other volatile altcoins pumped with bitcoin from depositors.

And if at some point the company had to slow down, they could be transparent with investors and tell them interest rates were going to be reduced for a while, so they could continue operating smoothly. And native tokens should never be pumped with customers' funds. That was a big mistake, as it was to borrow money from other companies for the same purposes, which subsequently borrowed more money from other companies until all of them are falling apart.

[bbc.reporter]

This might be where it will be the community who will be biting the dust after another dump on bitcoin to $10k. However, it appears that we underestimating the negative impact of Genesis Global's collapse on the cryptospace. No one is talking about it and much of the conversations and the arguments are still on FTX and Alameda Research. This might be the most shocking news because no one appears to be paying attention that Genesis Global is owned by Barry Silbert's DCG.

Is this only fud or are news writers beginning to be correct as some of them were correct in their speculations on FTX?



Now, fears are swirling that $10 billion bitcoin and crypto giant Digital Currency Group (DCG) could be in trouble after its crypto lender Genesis was forced to pause withdrawals and reports emerged it's seeking an emergency $1 billion loan.

Ahead of the withdrawal suspension, Genesis requested an emergency loan of $1 billion from investors, it was reported by the Wall Street Journal, citing a leaked fundraising document that described a "liquidity crunch due to certain illiquid assets on [Genesis'] balance sheet."

"There has been a target on Genesis's back for days," Joseph Edwards, an investment partner at Securitize Capital, told Reuters, adding it's "a signal of worse outcomes" for the crypto market due to Genesis' close links with brokers, family offices and money managers.

Source https://www.forbes.com/sites/billybambrough/2022/11/20/in-huge-trouble-10-billion-earthquake-could-be-about-to-cause-bitcoin-and-ethereum-price-chaos/

[Pmalek]

If we try to take an optimistic view, this will teach people to guard their own bitcoins, their own private keys...

How I wish that this was true. What I see from all this mess is that a minority will switch to self-custody solutions while others will say they tried Genesis, FTX, Celsius, etc., they all failed them, so it's now time to move their money into Binance, Coinbase, or KuCoin...

People should tell them FU and reject any tests with this new digital crap.

You are forgetting they will be enticed to take part with a $20 voucher for McDonalds with unlimited Coca Cola refills or something similar that they will gladly accept. It's all about bread and circuses.