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Genesis' Crypto-Lending Unit Is Suspending Withdrawals in Wake of FTX Collapse
- exabrial 4y agoHoly holy hell, I literally _just_ got my captital out this morning. That. was. close.
- Fatnino 4y agoIndiana Jones hat scene
- f0e4c2f7 4y agoI immediately had the same thought https://media.tenor.com/jVpPsiwNI-gAAAAd/indiana-jones-door-close.gif https://media.tenor.com/jVpPsiwNI-gAAAAd/indiana-jones-door-...
- endorphinbomber 4y agoStill remember when I pulled out my money out of Bittrex 2 hours before they shut down for half a year. Had a funny feeling and still can't explain, congrats to your intuiton.
- SilasX 4y agoSame. Requested redemption from Gemini Friday morning (11/11), and notified it completed at 5am today (11/16), got the email about Genesis two and half hours later. (Gemini uses Genesis for their lending program, Earn.)
- birracerveza 4y agoAnyone who still has any significant amount of money in any CEX, Coinbase included, is either not paying attention or irredeemably naive. It's especially tiresome the fact that people keep pointing at these disasters claiming "crypto has failed", when reality is the exact opposite: CEXs are the exact antithesis of the core crypto idea of decentralizing trust. "Not your keys, not your coins" keeps being proven right.
- danuker 4y agoNot your keys, not your coins. Also, be mindful of what the FDIC (or its equivalent in your country) insures per bank account. It might be worth it to use multiple accounts.
- ncallaway 4y agoPlease be aware that the FDIC *does not insure against losses from these exchanges*. Do not put money into any crypto exchange, relying on the FDIC to protect you in the event the exchange goes bust.
- danuker 4y agoYou are correct. What I was pointing out is that actual regulated banks are also prone to failures, especially in these trying times. Because they also hold a fractional reserve.
- marticode 4y agoIn developed countries, banks are rarely left to completely fail nowadays, the small ones are usually taken over by the big ones, and the big ones are bailed by governments/regulators.
- birracerveza 4y agoIt's not a problem, until it is. Mh, sounds familiar.
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- lxgr 4y agoRarely isn't never: https://www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/ https://www.fdic.gov/resources/resolutions/bank-failures/fai... That list seems to include buyouts, though, i.e. cases in which the FDIC didn't actually have to directly disburse funds. In Europe, there were two bank failures that I know of in the last few years that required tapping into the regional FDIC equivalents. In at least one of them, quite a few depositors actually lost money (due to having savings in excess of the insured maximum).
- hackarama 4y agoSame, and swapped my GUSD just in case that decides to do anything screwy.
- automatic6131 4y ago>I literally _just_ got my captital out this morning. That. was. close. There can be clawbacks for anyone getting their money back within 90 days of bankruptcy filings. I wouldn't spend it all just yet.
- exabrial 4y agoThen I'll pull it out as cash and they can fight me for it.
- berberous 4y agoCash is fungible. Unless you pull out all your money, they can potentially go after an amount equal to whatever you withdrew…
- automatic6131 4y agoIf Genesis is found to be operating as a ponzi scheme (lol, lmao), then the bankruptcy court will send you a bill for the money you've withdrawn. You can try to fight that in court - but you'll lose. If you try to fight for it another way, I wish you the best of luck.
- FrobeniusTwist 4y agoYour advice above about maybe not spending recent withdrawals is really good. I just want to point out that recovery of "preferences" (which is what these withdrawals might, possibly, be) doesn't depend on there having been a Ponzi scheme, or any fraud at all, in the underlying business. Identifying and recovering preferential transfers is one of the main jobs of a bankruptcy trustee, and they are given legal superpowers with which to do their jobs.
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- danaris 4y agoWhat is this, four organizations suspending withdrawals after FTX's demise? Five? I'm not the most plugged-in to the cryptocurrency community; anyone know what proportion of cryptocurrency business this makes up?
- throwaway22032 4y agoThere are something like two or three, at least single digits, genuinely legitimate large exchanges out there, they've been around for ~ ten years at this point, and even those I wouldn't trust enough to keep a balance at for more than a day or two. All of the pure shitcoin exchanges, centralised "loan" providers, etc etc are probably going under. Most people I know have had this priced in since forever, they come and go all of the time.
- woah 4y agoThis isn’t cryptocurrency, these are sketchy unlicensed banks with a cryptocurrency theme. People holding coins in their own wallets are entirely unaffected. I hope that crypto exchanges are outlawed soon.
- gergov 4y agoWell, once all these go down the prices of currencies will also come down, which affects even those who had their coins in cold wallets - unless they plan to hold without making a profit until the heat death of the universe
- rglullis 4y agoPlenty of people were underwater with their mortgages in 2008, but home prices came back up not too long after.
- JumpCrisscross 4y ago> Plenty of people were underwater with their mortgages in 2008, but home prices came back up There is a pretty fundamental difference between houses and crypto.
- spaceman_2020 4y agoA pause pretty much means they're insolvent.
- TSiege 4y agoThis also seems to be affecting Gemini Earn customers https://twitter.com/lawmaster/status/1592870524941922305 https://twitter.com/lawmaster/status/1592870524941922305
- BLanen 4y agoGemini saying "yea uh you had to read the fine print and it's not actually us" is a hilarious copout and cryptobros repeating the line HAHA
- PretzelPirate 4y agoI did read the fine print when looking into this which clearly stated the loans were high risk and you may not get back any of your money. I have reasonable risk management and decided the returns weren't worth the risk, but it seems that many people either have worse risk management or were desperate to better their financial situation and saw a high-risk bet as the only option. I hope we haven't raised people with such poor risk management, so I wonder if people are desperate to gamble because they don't see a better solution.
- Animats 4y agoThe fine print: "Gemini is partnering with accredited third party borrowers including Genesis, who are vetted through a risk management framework which reviews our partners’ collateralization management process." Over at Genesis, there's this news article: "Crypto lender Genesis accepts NFTs as collateral for loans" [1] or [2]. That's in the Financial Times today. Does this mean that on the same day, Genesis stopped withdrawals and started accepting NFTs as collateral? What this seems to say is that Genesis borrows money at a high interest rate and lends it out on even riskier loans. What could possibly go wrong? Or, more to the point, what has already gone wrong? [1] https://www.ft.com/content/ce600e79-93cf-40c8-928c-e9bbd66072c7 https://www.ft.com/content/ce600e79-93cf-40c8-928c-e9bbd6607... [2] https://archive.ph/8e4LJ https://archive.ph/8e4LJ
- manholio 4y agoLet's be clear about something: this is not "contagion", as if panicking people are causing bank runs against iliquid financial institutions that have strong assets in the long run. No, this is a ponzi scheme running out of suckers: the fundamental source of crypto growth and liquidity was getting new people and new money in, and that flow largely stopped this spring. Without that inflow, the bubble explodes because it has unsound fundamentals, there is nothing in the crypto space today that could justify a 1 trillion dollars value creation. Maybe some day crypto will create that value and some people want to be there and invest today, but this is only a belief, and a belief shared by enough people and with no basis in reality is called a bubble. Of course, the first to go are the most fraudulent and sketchy shops, like FTX turned out to be, and it would apear they "caused" the crisis, like Lehman in 2008. But the economic reality is that the crisis was unavoidable, it's intrinsic to the limited real world utility of crypto.
- dvt 4y agoMaybe someone can explain this to me (not an expert in traditional finance), but how in the world are lending instruments not categorized as securities? Let's say I lend you 10 bucks (and I earn some interest on the money over time T), you give me a receipt/contract, and then I sell that receipt to someone else before T expires (the price I sell at is some complicated equation based on your chance to default, inflation, interest rates, the time left out of T, and so on). Can I do that? Is that receipt not a security? Seems this would trivially fail the Howey Test, but it's also completely ubiquitous in the crypto sphere (see stETH, CurveFI, Tomb Finance, etc.). So.. I'm confused. Forget all the super degenerate stuff (shorting, options, yield farming, nth order derivatives, speculating on NFTs, etc.), this whole insanity is happening because people are seemingly allowed to lend willy nilly without any regulatory pushback.
- zeven7 4y agoI don't know the real answer to your question, but a lot of products "aren't available in the US", which means the marketing site blocks by IP to try to avoid getting in trouble
- VHRanger 4y agoThe answer is that they almost certainly are securities, but the precedent isn't established. White collar prosecution is expensive and complex, and prosecutors care about their careers. They want certain wins, preferably fast. So the SEC are waiting for slam dunk cases to establish precedent. In practice this means they wait for something large and obvious to implode, and prosecute months/years after the fact.
- dvt 4y ago> So the SEC are waiting for slam dunk cases to establish precedent. But this might never happen. I can launch a lending protocol completely anonymously, pump it on Twitter/Telegram, and get 7+ figures TVL overnight. It might not even be predatory (even though a lot are), but who would the SEC even go after at that point?
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- SevenNation 4y agoIt appears the company is saying that the trading/custody business is not affected, but loan redemptions and originations are. This Bloomberg article has more: > Crypto brokerage Genesis is suspending redemptions and new loan originations at its lending business after facing what it described as “abnormal withdrawal requests” in the aftermath of the collapse of FTX. https://www.bloomberg.com/news/articles/2022-11-16/crypto-brokerage-genesis-suspends-withdrawals-and-originations-at-lending-arm https://www.bloomberg.com/news/articles/2022-11-16/crypto-br... There's also this interesting bit: > Last week, Genesis said it would get a $140 million equity infusion from its parent company, Barry Silbert’s Digital Currency Group, after disclosing that its derivatives business had $175 million in funds locked in an FTX trading account. The lending business had previously been affected by its exposure to bankrupt crypto hedge fund Three Arrows Capital, to which it had made a $2.4 billion loan. FWIW, Digital Currency Group is the company behind the popular GBTC closed-end fund, which is available to US investor brokerage accounts. This fund has had problems of its own, trading at a relatively large (and growing) discount for some time: https://www.bloomberg.com/news/articles/2022-05-13/grayscale-s-bitcoin-fund-hits-record-discount-after-sec-meeting https://www.bloomberg.com/news/articles/2022-05-13/grayscale... Oddly enough, the Genesis Trading yield farming page makes it look like nothing unusual is going on. No announcement, no notice, no nothing. Situation normal. https://genesistrading.com/services/yield-services https://genesistrading.com/services/yield-services
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- polygamous_bat 4y agoTo the crypto-inclined people commenting on every thread about how failing centralized exchanges don't effect you and are actually good for Bitcoin, how are you planning to convert your hard earned crypto into US dollars that you can spend at a grocery store? If your answer is "P2P exchanges," how do you plan to secure your cold wallet against the infamous rubber hose cryptanalysis?
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- throwup 4y ago1. Some exchanges are irresponsible and fail. Some exchanges are not irresponsible and do not fail. If you do a minimum of due diligence, it's not hard to tell the responsible from the irresponsible. Do they regularly publish independently-verifiable audits? Or are they spending boatloads money on stadium sponsorships? 2. If you're using an exchange for exchanging currencies (as opposed to speculation) you can send your money there, exchange it, and immediately send it back out. You're only exposed for at most an hour or two. If you've chosen a well-reputed exchange that's been around for 10+ years, chances are effectively nil that it suddenly disappears during that small window with no warning signs beforehand.
- DebtDeflation 4y ago>Do they regularly publish independently-verifiable audits? Which exchange does this? I'm not talking about finding some mom and pop accounting shop to issue a 1 page report stating they checked on a certain date and the reserves were there, where the majority of the 1 page was a disclaimer stating that this wasn't technically an "audit" and should not be relied upon as such.
- throwup 4y agoKraken does at least. AIUI their auditor is given a snapshot of all account balances at a particular point in time, and builds a merkle tree. You can then reconstruct your expected merkle leaf and verify that your specific account was included in the tree. You can verify on the auditor's website, or you can do it by hand. Kraken's help page even has code snippets in Python/Go/etc to make it easy! More info: https://www.kraken.com/proof-of-reserves https://www.kraken.com/proof-of-reserves https://proof-of-reserves.trustexplorer.io/clients/kraken https://proof-of-reserves.trustexplorer.io/clients/kraken
- UltraViolence 4y agoIn other news: the several international banks are moving forward with their "Digital Dollar" experiment. It's news like this that keeps me holding on to my Bitcoin. Once digital cryptocurrencies become in vogue again BTC will once again become valuable.
- coffeebeqn 4y agoI don’t really get the point. My dollars are already digital. It’s not like my employer sends a stack of 100s to my banks vault every two weeks
- alexb_ 4y agoBut you can still withdraw that for stacks of 100s if you so please. And these dollars cannot be tracked by large corporations hungry for any bit of data about you.
- nayuki 4y agoBanknotes have serial numbers printed on them. It's not inconceivable for ATMs to record serial numbers when withdrawing and banks to record serial numbers when depositing cash.
- pessimizer 4y agoHaving digital dollars is completely unrelated to banning hard currency. I know this because the vast majority of current dollar business is completely digital, and hard currency exists. I mean, people withdraw bitcoin for stacks of $100s.
- Synaesthesia 4y agoI see this includes Luno, the biggest exchange in South Africa. https://mybroadband.co.za/news/cryptocurrency/469367-luno-savings-wallet-partner-halts-withdrawals.html https://mybroadband.co.za/news/cryptocurrency/469367-luno-sa... Edit: I see it's only for their savings wallet.
- mavu 4y ago
- lovingCranberry 4y agoSaving you a click: Queen - Another one bites the dust