The sudden failure of the FTX cryptocurrency exchange a few weeks ago had a significant impact on the entire cryptocurrency market, particularly on Bitcoin. In that time, the price of bitcoin dropped to as low as $15,800, it sold for about $70,000 just a year ago. On the other hand, Ethereum has also dropped to a level near $1,000, and there will be a drastic further decline as has been predicted by JP Morgan
There are currently worries that the $10 billion Bitcoin and cryptocurrency juggernaut Digital Currency Group may be in crisis. This is in response to Genesis, its largest lender, being compelled to halt withdrawals. Additional sources state that it is looking for a $1 billion emergency loan.
Genesis, one of the largest crypto-lending platforms and a member of the Digital Currency Group, stopped allowing withdrawals from users this week. The company attributed it to FTX’s abrupt collapse.
Foundry, a Bitcoin and cryptocurrency mining company, is owned by Digital Currency Group, which had a market cap of $10 billion in 2021. It shares ownership of Grayscale, Luno, and the newest Coindesk location.
According to the Wall Street Journal, Genesis first asked its investors for a $1 billion loan before it halted withdrawals. A leaked fundraising memo that discussed a cash shortage due to risky investments on the company’s balance sheet was quoted by the Journal in turn, Wall Street.
Probably the wisest choice
The Genesis for a couple of days have been singled out for persecution, according to Joseph Edwards of Securitize Capital, who spoke to Reuters. He continued by saying that given Genesis’ deep ties to brokers, family offices, and money managers, it foretells worse things for the cryptocurrency sector in the future.
A report that a significant portion of FTX’s balance sheet comprised illiquid cryptocurrency that it had produced contributed to the company’s crash. FTX’s founder and CEO, Sam Bankman-Fried, departed two weeks ago, and bankruptcy protection has been applied for by the company in the US.
In a media interview, a firm representative stated that in the middle of its financial crisis, Genesis is looking into solutions. He claimed that after carefully weighing all of the possibilities, the tough decision to halt withdrawals was reached. He concluded that this would assist the business in developing the greatest solution for clients.
After FTX, the new Genesis scenario is raising concerns in the cryptocurrency community. According to detractors of cryptocurrency, there are whispers that it could be the next thing to collapse.
Ken Emmanuel is a Blockchain Content writer, a Web3 Enthusiast and a Social Media Management Strategist, he likes writing educative contents to help people gain more knowledge and get inspired. The growth of any organization he work with is always his priority. He is a Geographer by profession and loves reading.