Full-service digital currency prime broker, Genesis, is likely to lose ‘hundreds of millions’ due to its exposure to over-leveraged hedge fund Three Arrows Capital (3AC) and Hong Kong-based crypto lender Babel Finance.
According to CoinDesk, people familiar with the matter said that Genesis’ losses are related to exposure to over-leveraged hedge funds. three arrow 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 bloodshed cryptocurrency Market. Founded by Su Zhu and Kyle Davis, the Singapore-based fund suffered heavy losses following the collapse of Terra Token UST and its sister Luna.
A court in the British Virgin Islands on Wednesday 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 failing to meet margin calls.
Sources told CoinDesk that the exact match of Genesis’ losses may not be known for some time as the company is seeking at least partial repayment from its counterparties and that some of the losses may be offset by hedging.
Another market source said that amid such uncertainty, Genesis is drawing credit lines from counterparts left and right.
Earlier this month, on June 17th, Genesis CEO Michael Morrow said, “Genesis can confirm that we have carefully and deliberately minimized our losses with a major counterparty, which began earlier this week.” We failed to meet the margin call. No client funds have been affected. We have sold and/or hedged all liquid collateral to cover any downside.”
Morrow also stated that the company will actively pursue recovery on any potential residual loss through all available means, however, he also stated, “Our potential losses are limited and our own balance as an organization The sheet could be purged against. We shed the risk further.”
“The genesis will be long-term and we are committed to growing the industry,” Moro said.
The 3AC collapse has been widely felt in the blockchain industry as many investors have lost their assets. In addition, crypto brokerage Voyager Digital has given notice of default to 3AC for its failure to repay a loan of $650 million.
Genesis provides single access to the digital asset markets. Launched in 2013, since then, the company has grown to facilitate billions in monthly digital currency trading, loans and transactions.
Genesis is owned by Digital Currency Group (DCG) which also owns CoinDesk.
According to CoinMarketCap, currently, the global crypto market cap is $860.48 billion, down 4.17% from the previous day. Bitcoin is struggling to hold $19,000 and dominance is down to 42.58%.