Over-the-counter crypto dealer Genesis Global Trading could face losses of “hundreds of millions of dollars” due to loss of liquidity by counterparties Three Arrows Capital and Babel Finance.
According to anonymous sources familiar with the situation, Genesis Trading requires reimbursement from its counterparties to at least partially compensate for losses. In this case, part of the losses can be compensated by hedging.
Formerly Genesis Trading CEO Michael Moro wrote on Twitter:
“We have carefully considered how to mitigate our losses due to the problems of a large counterparty who was unable to satisfy the requirement and close the margin call this week. No customer funds are affected. We have sold or hedged all available liquid collateral to minimize potential losses.”
However, it is now becoming clear that the “carefully thought out” strategy of Genesis Trading still fails, and the amount of possible losses can be hundreds of millions of dollars.
This week, a British Virgin Islands court ordered the liquidation of cryptocurrency hedge fund Three Arrows Capital, while cryptocurrency lending platform Babel Finance suspended financial transactions and prohibited withdrawals from client accounts.
Source: Bits
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