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‘Huge Problems’: Leak Shows $10 Billion Earthquake Could Cause Bitcoin And Ethereum Prices To Fall

'Huge Problems': Leak Shows $10 Billion Earthquake Could Cause Bitcoin And Ethereum Prices To Fall

bitcoinBTC
and cryptocurrencies have been shaken by the sudden collapse of major cryptocurrency exchange FTX this month (even though Elon Musk made a surprise cryptocurrency prediction for 2023).

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The price of bitcoin has fallen below $17,000 per bitcoin from nearly $70,000 12 months ago, while ethereum has crashed to $1,000 per ether and JPMorgan has warned that the price collapse may just be getting started.

Concerns are now circulating that the $10 billion bitcoin giant Digital Currency Group (DCG) could run into trouble after its cryptocurrency lender Genesis was forced to put withdrawals on hold and there were reports that it is seeking a $1 emergency loan. billion dollars.

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This week, Genesis, one of the largest crypto lenders and part of DCG’s sprawling crypto empire, suspended customer buyouts in its lending business, blaming the sudden collapse of FTX. DCG, which was valued at $10 billion last year, also owns bitcoin and crypto miner Foundry, asset manager Grayscale, crypto exchange Luno, and a news outlet. Coindesk.

Ahead of the withdrawal freeze, Genesis has requested a $1 billion emergency loan from investors. Wall Street Journalreferring to a leaked fundraising document that describes a “liquidity crisis due to certain illiquid assets on [Genesis’] balance”.

“Within days, Genesis had a target,” said Joseph Edwards, investment partner at Securitize Capital. Reutersadding that this is a “sign of worse performance” for the crypto market due to Genesis’ close ties to brokers, family offices and money managers.

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

“Genesis has been exploring all possible options in the face of the liquidity crunch caused by the FTX news,” a spokesperson for the company said. Magazine. “After considering a number of options, we have made the difficult decision to temporarily suspend repayments and new lending in the lending business so that we can determine the best solution and outcome possible for clients.”

The Genesis situation in the wake of the FTX collapse has caused consternation among the crypto community, with crypto skeptics predicting it could be the next domino fall amid speculation about the future of crypto exchange Gemini and crypto financial services company Galaxy. Digital.

“[Genesis, Grayscale, Galaxy, Gemini are] now everyone is in huge trouble and, or maybe they are falling apart,” said NYU economics professor Nouriel Roubini, aka Dr. Doom. published to Twitter. “From the moon, all the lunatics are now falling to the earth.”

“This is obviously not good for Genesis,” said Cory Clippsten, an outspoken critic of non-bitcoin cryptocurrencies and chief executive of bitcoin buying app Swan Bitcoin. published on Twitter, citing unconfirmed social media rumors that DCG is desperate to “sell the Genesis credit book”.

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However, some in the bitcoin and crypto space are unfazed by the flood of negative messages.

“In the long term, this is unlikely to significantly set back the digital asset space,” Martin Hisbock, head of blockchain and crypto research at Uphold, said in email comments.

“The risk of infection is now higher than ever, but we believe it is negligible. Don’t forget how small the space is still. This is not an Enron or Lehman moment. For most of the firms involved in the scandal, from Sequoia to Tiger and Circle, it’s about pocket money.”

Written by khirou

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