Genesis’s move Wednesday only affects its lending business, according to interim Chief Executive Derar Islim, who said the company’s spot and derivatives trading and custody businesses “remain fully operational.” However, the decision to halt withdrawals comes after a painful stretch for the brokerage.
Cracks started to surface after Genesis got caught up in the bankruptcy of hedge fund Three Arrows Capital. Genesis was the biggest creditor ensnared in that collapse after the fund failed to meet margin calls. DCG assumed some liabilities and filed a $1.2 billion claim against Three Arrows, which is under liquidation. Genesis said in October -- before the FTX blowup -- that lending plunged 80% in the third quarter.
“Genesis Global Capital, Genesis’s lending business, made the difficult decision to temporarily suspend redemptions and new loan originations. This decision was made in response to the extreme market dislocation and loss of industry confidence caused by the FTX implosion,” said company spokesperson Amanda Cowie. “This impacts the lending business at Genesis and does not affect Genesis’s trading or custody businesses. Importantly, it has no impact on the business operations of DCG and our other wholly owned subsidiaries.”
Amid the recent brewing turmoil, DCG has reshuffled its C-suite. Mark Murphy was promoted to president from chief operating officer as part of a restructuring that saw about 10 employees exit the company. Meanwhile, a handful of Genesis’s trading-desk personnel have also departed, as have its head of market insights and its chief risk officer.
Silbert founded DCG after he sold SecondMarket, a private-asset marketplace that was acquired by Nasdaq in 2015. Last year he told the Wall Street Journal that he sees Standard Oil as an inspiration for his digital-asset firm. Prior to SecondMarket, Silbert also worked at Houlihan Lokey, after he graduated from Emory University, his LinkedIn profile shows.
--With assistance from Muyao Shen, Olga Kharif and Anna Irrera.
This article was provided by Bloomberg News.