The president of the tech firm behind Avalanche (AVAX) says that the implosion of a major digital asset lender would have more severe consequences for the crypto markets than the recent FTX fiasco.
In a new Bloomberg interview, Ava Labs president John Wu says that the possible meltdown of Genesis Global Capital poses a bigger risk in the digital asset markets than the bankruptcy of the FTX exchange.
“In my seat, I actually think Genesis is a bigger issue in terms of the capital markets of crypto than even FTX.
Genesis was the largest lender out there. They’ve done unsecure as well as collateralized lending. There’s really no one else doing that lending. Without them in the markets, all the people in the value chain, all the companies like market makers who need to borrow in order to do market making, you’re going to see liquidity get sapped out of the markets, spreads widen, no investors want to come in and you have a vicious cycle.
So, Genesis is a very important part of the crypto capital markets.”
Earlier this month reports emerged that Genesis had halted withdrawals due to liquidity challenges brought about by the downfall of FTX and crypto hedge fund Three Arrows Capital (3AC).
Last week, another report revealed that Genesis had requested an emergency loan of $1 billion from investors prior to halting withdrawals.
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