Crypto broker Genesis has announced that it is halting customer withdrawals, adding more uncertainty to an already tumultuous digital currency landscape.
The announcement comes after the court approved a $175 million settlement between Genesis and bankrupt cryptocurrency exchange FTX.
Genesis Halts Withdrawals
The news was first broken on X (formerly Twitter) by @WatcherGuru. Genesis had already announced plans to cease its crypto trading business in September. In line with that announcement, Genesis has shuttered its digital assets offerings after reaching an agreement with Digital Currency Group (DCG) regarding recovery payments and its ongoing bankruptcy proceedings.
The company, in its September announcement, had stated it would discontinue its crypto trading offerings in a decision that was made due to business reasons. The announcement stated,
“Genesis has decided to stop offering digital asset spot and derivatives trading through GGC International, Ltd. (GGCI). This decision was made voluntarily and for business reasons. With this termination of services from GGCI, Genesis no longer offers trading services through any of its business entities.”
The halt comes after the company’s bankruptcy filing earlier this year, which was triggered by the Gemini Exchange’s refusal to facilitate customer withdrawals. The situation has since escalated, leading to legal intervention and a settlement between Genesis and FTX, shedding some light on the challenges faced by the company and the larger crypto ecosystem.
Decision Comes Day After Settlement With FTX
The decision to halt withdrawals comes just a day after a court approved a $175 million settlement between FTX and Genesis. The United States Bankruptcy Court for the Southern District of New York gave the green light for the settlement between FTX and GGC’s parent company, Genesis Global Holdings, in a court filing submitted on the 11th of October. Following the approval, Genesis debtors are authorized to enter into and perform under the settlement agreement and pay $175 million to FTX.
The resolution will see Alameda Research, FTX’s trading arm, receive the settlement amount from the bankrupt crypto lender. The settlement addresses several claims made by FTX against Genesis. This has resulted in a significant reduction from the original claim amount, which was a staggering $3.9 billion.
Genesis has called the settlement “fair and equitable.” However, some FTX creditors have expressed dissatisfaction and asked for a contested resolution. The approval comes amidst the ongoing trial of FTX founder Sam Bankman-Fried, who is facing several charges, including fraud and money laundering, and Genesis’s exposure to FTX and its collapse, further complicating the situation. Genesis’s decision to suspend withdrawals, file for bankruptcy, and settle with FTX highlights the current challenges confronting the crypto space.