According to CoinDesk, people familiar with the matter stated that the losses at Genesis relate in part to exposure to over-leveraged hedge fund Three Arrows Capital (3AC) and Hong Kong-based crypto lender Babel Finance and are on the order of “a few hundred million dollars.
Three Arrows Capital is the latest casualty of the bloodbath in the cryptocurrency markets. Founded by Su Zhu and Kyle Davies, the Singapore-based fund suffered huge losses following the collapse of Terra tokens UST and its sister Luna.
On Wednesday, a court in the British Virgin Islands ordered the liquidation of crypto hedge fund Three Arrows Capital (3AC), after the company suffered major losses in the recent market turmoil. Earlier this month, 3AC liquidated its positions after it failed to meet margin calls.
Sources told CoinDesk that the precise tally of Genesis’ losses may not be known for some time because the company is seeking at least partial repayment from its counterparties and some of the losses may have been offset by hedging.
Another market source stated that amid such uncertainty, Genesis has been pulling credit lines from counterparties left and right.
Earlier this month, on June 17, Michael Moro, CEO of Genesis said, "Genesis can confirm that we carefully and thoughtfully mitigated our losses with a large counterparty who failed to meet a margin call to us earlier this week. No client funds are impacted. We sold and/or hedged all of the liquid collateral on hand to minimize any downside."
Moro had also said that the company will actively pursue recovery on any potential residual loss through all means available, however, he also added, "our potential loss is finite and can be netted against our own balance sheet as an organization. We have shed the risk and moved on."
"Genesis will be around for the long term and we are committed to driving this industry forward," Moro had said.
The 3AC collapse has been felt widely in the blockchain industry as many investors loose their wealth. Also, crypto brokerage Voyager Digital has served a notice of default to 3AC for failure to repay a loan worth $650 million.
Genesis provides a single point of access for digital asset markets. Launched in 2013, since then, the company has grown to facilitate billions in monthly digital currency trades, loans and transactions.
Genesis is owned by Digital Currency Group (DCG) which is also the owner of CoinDesk.
As per CoinMarketCap, currently, the global crypto market cap is $860.48 billion, a 4.17% decrease over the last day. Bitcoin is struggling to hold $19,000 with dominance declining to 42.58%.
