‘In Huge Trouble’: Leak Reveals $10 Billion Earthquake Could Wreak Havoc on Bitcoin and Ethereum Prices

bitcoins
bitcoins
and cryptocurrencies were left reeling from the sudden collapse of major cryptocurrency exchange FTX this month (although Elon Musk issued a surprise 2023 crypto forecast).

subscribe now at Forbes cryptocurrency and blockchain advisor and successfully navigate the latest bitcoin and cryptocurrency market crash

The price of bitcoin has plunged below $17,000 per bitcoin, down from nearly $70,000 12 months ago, while ethereum has plunged to $1,000 per ether with JPMorgan warning the price crash may have just begun.

Now, fears are swirling that $10 billion worth of bitcoin and crypto giant Digital Currency Group (DCG) could be in trouble after its crypto lender Genesis was forced to suspend withdrawals and it emerged that it is seeking a loan emergency relief of $1 billion.

It’s in a brutal bear market that you need up-to-date information the most! Join now for free CryptocodeA daily newsletter for traders, investors and crypto-curious that will keep you abreast of the market

This week, Genesis, a major cryptocurrency lender that is part of DCG’s vast crypto empire, suspended customer repayments in its lending business, blaming the sudden collapse on FTX. DCG, valued at $10 billion last year, also owns bitcoin and crypto miner Foundry, asset manager Grayscale, cryptocurrency exchange Luno and news outlet Coindesk.

Before the suspension of the withdrawal, Genesis requested a $1 billion emergency loan from investors, it was reported by the Wall Street Journalciting a leaked fundraising document that described a “liquidity crisis due to certain illiquid assets on [Genesis’] balance”.

“There’s been a target on Genesis’ back for days,” said Joseph Edwards, an investment partner at Securitize Capital. Reutersadding that it is “a sign of worse results” for the cryptocurrency market due to Genesis’ close ties to brokers, family offices and money managers.

FTX’s sudden collapse this month was in part triggered by reports that a significant portion of its balance sheet consisted of illiquid cryptocurrencies it had created. Just last week, FTX filed for bankruptcy protection in the US and its founder Sam Bankman-Fried (SBF) stepped down as CEO.

“Genesis was exploring all possible options amid the cash crunch resulting from the FTX news,” a company spokesman told the magazine. “After reviewing a number of options, we have made the difficult decision to temporarily halt repayments and new loan creation in the lending business so that we can identify the best possible solution and outcome for clients.”

The Genesis situation, coming in the wake of the FTX implosion, has caused consternation in the cryptocurrency community, with cryptoskeptics predicting it could be the next domino to fall as rumors fly about the future of cryptocurrency exchange Gemini and the Digital Galaxy cryptocurrency financial services company.

“[Genesis, Grayscale, Galaxy, Gemini are] now all in big trouble and, or collapse,” New York University economics professor Nouriel Roubini, known as Dr Doom, published on Twitter. “From the moon, all the madmen are now crashing down to Earth.”

“Apparently, that doesn’t seem to be going well for Genesis,” Cory Klippsten, an outspoken critic of non-bitcoin cryptocurrencies and CEO of bitcoin-buying app Swan Bitcoin, published to Twitter in reference to unconfirmed social media rumors that DCG is desperate “to sell the Genesis loan book.”

Sign up now for Cryptocode—A free daily newsletter for the crypto-curious

MORE FROM FORBES‘Underrated’ Coinbase CEO Reveals ‘Bullish’ Crypto Prediction After $200B Bitcoin & Ethereum Price Crash FTX

However, some in the bitcoin and crypto space remain unfazed by the cascade of negative reports.

“Long-term, the digital asset space is unlikely to experience a significant slowdown,” Martin Hiesboeck, head of blockchain and crypto research at Uphold, said in email comments.

“The risk of contagion is now higher than ever, but it is, we believe, negligible. Let us not forget how small the space still is. This is not an Enron or Lehman moment. For most of the companies involved in the scandal, from Sequoia to Tiger and Circle, the stakes are pennies.”

.

Leave a Reply

%d bloggers like this: