In today's edition of YIYL, we take a look at the rapidly changing story that is the deleveraging of the shitcoin market. Gemini might not be the biggest exchange in the world, but it has a fair bit of customers and offered them a yield product, which was actually them taking customer funds and handing it over to Genesis lending
Who would then lend those customer funds out to 3AC who would then pump it into shitcoins and ponzis like Luna? Seriously, what could go wrong?
After several blow-ups in the space Genesis continued to operate but FTX was the last straw and they also had to finally admit to 2 billion-plus hole in their balance sheet thanks to 3AC. That translated to all services offering yield through Gemini earn would shut down accounts.
Gemini even had to go as far as pausing withdrawals for those accounts, meaning they don't have the balance sheet to cover those deposits, but how bad could the exposure be?
900 mill in the hole
It's been revealed by the FT that Genesis holds around $900 million in Gemini customer assets. Gemini has formed a creditor committee to try to recoup funds from Genesis, as well as Genesis's parent company DCG, so Barry is going to have to cough up the cash and who knows what that does to other companies in the DCG stable.
Gemini refuses to be left on the hook for this deal and im sure other exchanges who used their product will back up Gemini to save face. No one wants to look like the moron that lost money, least of all exchanges since its there business to secure customer deposits.
Genesis looking for funding
Genesis is now reportedly working with investment bank Moelis & Co as they look around the street to find potential financing options according to reports. Earlier this month the lender attempted to raise $1 billion as part of attempts to avoid the “liquidity crunch” which forced it to stop withdrawals, which didn't pan out and now they're really desperate so terms will have to be favourable for anyone to want to come in and offer them a bailout.
To add insult to injury, Genesis also has $175 million stuck on FTX or rather claims with non-existent backing, or so we think, we won't know until the auditors and liquidators finally give us an update, but in worst case, money gone bro.
https://twitter.com/GenesisTrading/status/1590836594382032896
- GenesisTrading
Its only going to get worse
I don't see Gemini going tits up, but with interest rates where they are, no one wants to lend to bankrupt entities, not when im getting 4% to park it at the fed, any financing would have to come in with pretty brutal terms and restructuring to take on that risk.
So I think a few companies looking for billion-dollar + bailouts right now are shit out of luck, if we were still in a near zero rate environment, it could be different, but this is what Powell is aiming for and is getting his way.
The longer interest rates stay high, the more businesses that can't make money die, this pushes down asset prices, and businesses cut staff who then can't buy financial assets and need to sell them, driving deflation in the dollar vs assets and so the merry go round pulls more businesses down until the Fed feels the pain is enough to slow down inflation.
Trim that market cap
The bitcoin market alone has seen 800 billion trimmed off it since the all-time high and with that level of liquidity drying up, there are a lot of people trying to live off that $20,536,540,877 or so of daily volume, which might not be enough to keep businesses and even miners alive.
It sure looks like there are plenty of motivated sellers right now, and I am pretty sure it is miners and institutions rather than retail dumping their bitcoin positions.
If the primary asset in this space is dumping and remaining flat, it also doesn't lend to the pitch to raise capital to cover peoples arses.
Sources:
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Have your say
What do you good people of HIVE think?
So have at it my Jessies! If you don't have something to comment, "I am a Jessie."
Let's connect
If you liked this post, sprinkle it with an upvote or esteem and if you don't already, consider following me @chekohler and subscribe to my fanbase
| Earn Free bitcoin & shop | Earn Free Bitcoin & shop | Claim Free Bitcoin & Shop |
|---|---|---|
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