Contagion spreads to Genesis, the Winklevosses’ twin

(Bloomberg) — Crypto broker Genesis is halting redemptions in its credit business after facing what it described as “abnormal withdrawal requests” in the wake of the FTX crash. Genesis’ lenders include Gemini Trust Co., the cryptocurrency platform run by the Winklevoss brothers. Gemini said it has paused withdrawals on its lending program.

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Meanwhile, Singapore’s state investor Temasek International invested $200 million to $300 million in cryptocurrency giant FTX before it collapsed and is preparing to write down the entire bet, people familiar with the matter said.

Michael Novogratz, the billionaire founder of Galaxy Digital Holdings, said the crypto crisis could worsen, as the industry faces further contagion from the collapse of Sam Bankman-Fried’s FTX empire.

The fallout from the crisis threatens the future of crypto lenders like BlockFi Inc. and Voyager Digital Ltd. Digital asset markets extended losses Wednesday morning, with Bitcoin down 2% at 10:14 a.m. New York time.

Top stories and developments:

  • Singapore’s Temasek writes down over $200 million in FTX

  • FTX leaves an empty black box where due diligence used to be

  • FTX Hacker Appears With $288 Million Storage Of Token Ether

  • Matter Labs Raised $200M Just Before Chaotic Market Chaos

  • FTX’s Crypto Kids came dangerously close to the future

(Time references are New York unless otherwise noted.)

Jay Sidhu’s bank says it avoided the crash (10:02 am)

No regional U.S. bank stock rose higher during the crypto frenzy last year than Customers Bancorp Inc . Now the bank built by financial mogul Jay Sidhu and other companies riding the digital wave are trying to distance themselves from the crisis created by the breakup of the FTX empire.

“We have no exposure to FTX,” Sam Sidhu, chief executive of Customers Bancorp and son of Jay Sidhu, said in an interview, stressing that his bank’s exposure was limited because it was a “new entrant” to the market. “We are still building our business and taking market share and people are moving to us.”

Hearing set for December (at 10:01 am)

The House Financial Services Committee will hold a hearing in December on the collapse of the cryptocurrency FTX, according to a statement from the committee.

FTX and celebrity supporters sued (9:15am)

The exchange and Sam Bankman-Fried were sued by an investor who claimed the platform targeted “unsophisticated investors,” using celebrities including Tom Brady and Stephen Curry, who are also named as defendants.

Winklevoss’ Gemini pauses reviews (8:35am)

Gemini Trust Co., the cryptocurrency run by the Winklevoss brothers, has suspended withdrawals from its Earn program after partner Genesis Global did the same.

This does not affect any other Gemini products and services, the company said in a statement.

Genesis postpones withdrawals (8:00am)

Crypto broker Genesis is halting redemptions and new loans in its lending business after facing what it described as “abnormal withdrawal requests” in the wake of the FTX crash.

The withdrawal requests exceeded current liquidity at Genesis Global Capital, its lending arm, according to interim CEO Derar Islim. Genesis has hired consultants to explore all possible options, including raising new financing, and will submit a plan for its credit business next week, Islim said.

Temasek takes a hit (6:45)

Temasek invested between $200 million and $300 million in FTX before it collapsed, according to people familiar with the matter.

Temasek is now preparing to write off the entire amount, said one of the people, who asked not to be named as the matter was private. Another backer, Sequoia Capital, wrote down the entire value of its $214 million bet on the stock exchange, but a person with knowledge of the situation said SoftBank Group Corp. expects a loss of about $100 million on its investment.

FTX Hacker’s Haul (18:05 HK)

The hacker who hacked Sam Bankman-Fried who crashed crypto exchange FTX is now one of the world’s largest holders of the token Ether.

A wallet linked to the exploit exchanged about $49 million of stablecoins — mostly Dai — for Ether on Tuesday, security experts PeckShield said.

A wallet on FTX was drained of over $663 million in tokens, with $477 million of that suspected to have been stolen and the rest moved to secure storage by FTX, according to blockchain expert Elliptic.

Novogratz warns the worst may be yet to come (18:00 HK)

Mike Novogratz said that the worst of the crypto crisis following the collapse of the FTX exchange may yet unfold. Galaxy, the crypto-financial services company founded by Novogratz, last week disclosed $76.8 million in risk to FTX.com

Novogratz spoke at a conference on Wednesday alongside Binance Holdings Ltd. CEO Changpeng ‘CZ’ Zhao. Binance’s CEO said he’s seeing strong investor interest in a crypto industry recovery fund he plans to launch to help otherwise strong projects facing liquidity crunches.

Crypto Exchange AAX Needs Capital (17:55 HK)

Resuming operations at cryptocurrency exchange AAX depends on whether it can raise funds, the company said. Hong Kong-based AAX suspended withdrawals on Monday due to a flaw in its system update.

“If AAX is unable to secure financing to enable us to resume operations, AAX is committed to taking legal action to secure and secure the distribution of assets,” the company said.

Most Bitcoin Retail Buyers Lost (14:20 HK)

A study of how retail investors use cryptocurrency exchange programs suggests that about three-quarters have lost money on Bitcoin, according to the Bank for International Settlements.

Data spanning 95 countries from 2015 to 2022 indicates that the vast majority of app downloads occurred when the price of Bitcoin was above $20,000, the Basel, Switzerland-based BIS working paper said.

The world’s largest token has tumbled over 70% from a record high about a year ago, pressured by rapid monetary tightening and a series of massive cryptocurrencies, most recently FTX.

FTX Digital Markets records for Chapter 15 (noon HK)

FTX Digital Markets Ltd based in the Bahamas. has filed a Chapter 15 petition for recognition of a foreign proceeding in the Southern District of New York, according to a filing on the court’s website.

It is a subsidiary of FTX Trading Ltd., which filed for Chapter 11 bankruptcy on Nov. 11.

–With assistance from Amanda Fung, Sidhartha Shukla and Suvashree Ghosh.

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