Genesis, reeling from a sharp decline in the digital-asset market that sent the industry into a tailspin, said it originated US$8.4 billion in new loans in the third quarter, an 80 per cent plunge from the prior three-month period. Most of the rest of its businesses also experienced substantial declines.
Total active loans slumped to US$2.8 billion from US$4.9 billion in the second quarter, Genesis said in its quarterly earnings report. Trading volumes also declined, with spot volume sliding 44 per cent to US$9.6 billion. Its derivatives desk traded US$18.7 billion in notional value, down 30 per cent from the prior quarter. In one bright spot, the company’s custody services saw an 8 per cent increase in client signups.
The brokerage, a unit of billionaire Barry Silbert’s Digital Currency Group, said its lending desk was “staying active through the market sell-off” but the industry’s appetite for leverage “continues to wane” in the face of deteriorating macro conditions, characterised by persistent interest-rate increases, Bloomberg cited.
“Heading into the fourth quarter, the cryptocurrency market is lacking directional momentum as participants are taking stock after a beleaguering summer of endless negative headlines,” Genesis said in its report, adding that the company is “prepared for a sustained crypto winter”.
Genesis was the biggest creditor ensnared in the collapse of Three Arrows after the once high-flying hedge fund failed to meet margin calls. Over the summer, the company cut staff by 20 per cent and overhauled its leadership team. A series of senior executives have departed, including its co-head of sales and trading Matt Ballensweig and head of derivatives Joshua Lim. Most recently, its new chief risk officer Michael Patchen also left after three months.
