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Circle Yield Reduced to Zero, Gemini Earn Paused as Genesis Contagion Spreads

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Circle, Gemini, Luno and Hut 8 Mining are among the top crypto firms exposed to digital currency prime broker Genesis, which halted client buyouts and new lending within its lending division amid the fallout from the FTX collapse continues.

Genesis partnered with Luno in August 2020, claiming at the time that it would enable personalized interest-bearing products for the Luno community.

Hut 8 Mining said in January 2021 that it opened a Bitcoin Yield account in partnership with Genesis’ lending business, called Genesis Global Capital.

Bitcoin IRA – a company allowing customers to buy crypto for their retirement accounts – unveiled an interest-earning program offered through Genesis in February 2021. The company said the program would provide interest rates of up to 6% per year on cash and crypto holdings using the company’s self-managed retirement platform.

“We have no exposure to Genesis Lending or any crypto lending program,” Bitcoin IRA co-founder Chris Kline told Blockworks in an email.

Genesis tweeted Wednesday its decision to temporarily suspend withdrawals and new loans.

“This decision was made in response to the extreme market dislocation and loss of industry confidence caused by the FTX implosion,” the company said.

Genesis executives explained the situation to institutional clients during a call Wednesday morning, according to a source familiar with the matter. Another source told Blockworks last week that Genesis was “functionally insolvent.” The sources were granted anonymity to discuss sensitive business transactions.

Circle Yield powered by Genesis Credit Operations

Circle and Genesis, parent company of Digital Currency Group, signed a $25 million deal in 2020, aimed at accelerating the global adoption of USDC in consumer finance.

Under the strategic partnership, Genesis would help Circle add new yield and USDC lending services. The idea was to allow businesses to generate a “strong positive return” on their own USDC holdings, as well as those of their clients.

Circle wrote in a blog post that Genesis would help provide USDC-based access to credit to businesses and merchants who rely on USDC for cash transactions and trade payments. The services were due to go live in late 2020, and Circle’s terms and conditions state that the Bermuda-based Circle subsidiary had entered into loan agreements with “one or more” institutional borrowers, including Genesis.

Circle posted 0.25% annual percentage yield (APY) on its yield product on Tuesday, according to an internet archive. Today, that figure has been reduced to 0%. Blockworks has asked for comment.

yield circle current rates
Source: Circle

Gemini Earn Withdrawals Suspended

Cryptocurrency exchange Gemini is another major industry player to announce trouble as the Genesis contagion spreads.

Its Gemini Earn product has suspended withdrawals, and the exchange issued a statement noting that “We are aware that Genesis Global Capital, LLC (Genesis) – the Earn program’s lending partner – has suspended withdrawals and will not be able to respond to customer redemptions within the 5 business day Service Level Agreement (SLA).

However, the exchange also noted that other products and services are not affected, stating that “Gemini is a full-reserve exchange and depository. All client funds held on the Gemini exchange are held 1:1 and available for withdrawal at any time.

Crypto lent Ledn clarified in published statement Going through Twitter that he removed Genesis assets: “When Ledn started, Genesis was our main loan partner. Over time, we have reduced concentration risk by diversifying our list of borrowers. As of October 2022, Ledn no longer has an active loan relationship with Genesis.


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  • Ben Strack

    Ben Strack

    Ben Strack is a Denver-based journalist who covers macro and crypto-native funds, financial advisors, structured products, and the integration of digital assets and decentralized finance (DeFi) into traditional finance. Prior to joining Blockworks, he covered the asset management industry for Fund Intelligence and was a reporter and editor for various local Long Island newspapers. He graduated from the University of Maryland with a degree in journalism. Contact Ben by email at [email protected]

  • David Canellis

    David Canellis

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    Editor

    David Canellis is an Amsterdam-based editor and journalist who has covered the crypto industry full-time since 2018. He has a strong focus on data-driven reporting to identify and map trends within the ecosystem, from bitcoin to DeFi, from crypto stocks to NFTs and beyond. Contact David by email at [email protected]

  • Jon Rice

    Jon Rice

    blockages

    Chief Editor

    Jon is the editor of Blockworks. Previously, he was an editor at Cointelegraph, where he also created and edited the magazine’s long-form publication. He is the co-founder of Crypto Briefing, launched in 2017. He is a strong advocate for diversity, inclusion, and equal opportunity in the blockchain industry, and a strong supporter of the potential of personal empowerment offered by the democratization of financial markets.



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