‘In Big Trouble’ – Leak Suggests $10 Billion Earthquake May Cause Bitcoin and Ethereum Price Chaos

and cryptocurrencies were rocked this month by the sudden collapse of major crypto exchange FTX (although Elon Musk made a surprise crypto prediction for 2023).

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The price of bitcoin has fallen from around $70,000 12 months ago to below $17,000 per bitcoin, while ethereum has plunged to $1,000 per ether, with JPMorgan warning that a price crash could be just beginning.

Now, there are fears that $10 billion bitcoin and cryptocurrency giant Digital Currency Group (DCG) could be in trouble after crypto lender Genesis was forced to halt withdrawals and reports that it is seeking a $1 billion emergency loan.

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This week, Genesis, one of the largest crypto lenders that forms part of DCG’s expanding crypto empire, stopped refunding customers in its lending business, blaming the sudden collapse of FTX. DCG, which was valued at $10 billion last year, also owns bitcoin and cryptocurrency maker Foundry, asset manager Grayscale, cryptocurrency Luno and a news agency. Coindesk.

Before the withdrawal was suspended, Genesis sought a $1 billion emergency loan from investors. The Wall Street Journalciting a leaked fundraising document that described a “liquidity crunch due to certain illiquid assets”. [Genesis’] balance sheet.”

“Genesis has had a target on its back for days,” said Joseph Edwards, investment partner at Securitize Capital. ReutersHe added that this was a “signal of worse outcomes” for the cryptocurrency market due to Genesis’ close ties to brokers, family offices and money managers.

FTX’s sudden collapse this month was partly triggered by news that a significant portion of its balance sheet was made up of illiquid cryptocurrencies it created. 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 liquidity crunch caused by the FTX news,” a company spokesperson said. Journal. “After considering a number of options, we have made the difficult decision to temporarily suspend payments and new lending in our lending business so that we can determine the best possible solution and outcome for customers.”

Hot on the heels of the FTX implosion, the Genesis situation has created confusion among the crypto community, with crypto skeptics predicting it could be the next domino as rumors swirl about the future of cryptocurrency Gemini and crypto financial services firm Galaxy. Digital.

“[Genesis, Grayscale, Galaxy, Gemini are] Now they’re all in deep trouble or collapse,” said NYU economics professor Nouriel Roubini, known as Dr. Doom. placed to Twitter. “From the moon now all the crazies are crashing to Earth.”

“It doesn’t look good for Genesis,” Cory Klippsten, an outspoken critic of non-bitcoin cryptocurrencies and CEO of bitcoin buyer Swan Bitcoin, said. placed to Twitter, citing unconfirmed social media rumors that DCG is desperate to “sell the Genesis loan book.”

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

“In the long term, it’s unlikely that the digital asset space will be significantly pushed back by this,” Martin Hiesboeck, Uphold’s head of blockchain and cryptocurrency research, said in emailed comments.

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

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