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Over-the-counter cryptocurrency dealer Genesis Global Trading may face losses of "hundreds of millions of dollars" due to the loss of liquidity of counterparties Three Arrows Capital and Babel Finance.
According to anonymous sources familiar with the situation, Genesis Trading is demandingfrom their counterparties for at least partial compensation for losses.At the same time, part of the losses can be compensated by hedging.
Earlier, Genesis Trading CEO Michael Moro tweeted:
“We have carefully considered how to reduce ourlosses due to the problems of a large counterparty, which 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 obvious that Genesis Trading’s “carefully thought out” strategy is still failing, and the possible losses could amount to hundreds of millions of dollars.
This week the British Virgin CourtIslands decided to liquidate the cryptocurrency hedge fund Three Arrows Capital, and the cryptocurrency lending platform Babel Finance suspended financial transactions and prohibited the withdrawal of funds from client accounts.
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