Cryptocurrency collapse: more companies risk the disaster after FTX

Elizabeth Smith

After the FTX disaster, there seems to be no end in sight for cryptocurrencies. Thus, 3 more famous cryptocurrency companies risk bankruptcy with a worrying domino effect.

In the current environment, it seems difficult to be able to predict the path cryptocurrencies will take.

Yes, because anyone who has stayed away from the crypto sector over the past week has made a grave mistake: the sector is in chaos.

As exaggerated as this statement may sound, you should know that one of the most renowned and popular cryptocurrency exchanges, FTX, has collapsed in one of the worst ways ever seen in recent years. Declaring bankruptcy in a matter of days.

Cryptocurrencies have not benefited from this collapse, losing a great deal in terms of price and market capitalisation.

Suffice it to say that Bitcoin is playing dangerously just above USD 15,000, having lost more than 20% since the beginning of the month alone!

But who are the other companies in danger?

BlockFi, cryptocurrency lending

For the uninitiated, this is another of the most famous companies in the cryptocurrency world.

BlockFi is a crypto-lending platform with a range of financial products through which we can earn interest, or borrow fiat money or digital currency.

However, the question arises: how much could it withstand the fall of a giant like FTX?

The answer is easy: very little.

Cryptocurrency collapse, BlockFi with them

Judging by how the market has reacted, the crypto platform is not one to bet on at the moment.

The reason stems from the fact that, a few days ago, not only did BlockFi restrict the transactions possible within its platform, it also blocked users’ withdrawals.

And, to make matters worse, the company seems ready to declare bankruptcy at any moment.

Where does the problem lie? In the simple fact that BlockFi had been bailed out a few months ago by a USD 400 million credit facility kindly provided by FTX, with the possibility of buying it for USD 240 million.

Now that SBF’s company has fallen, the crypto-lending platform could meet its own end at any moment.

Gemini: another cryptocurrency decline?

All crypto exchanges share a highly volatile market made by investors particularly susceptible to what happens.

Among the companies suffering the most from market trends is Gemini.

The cryptocurrency exchange platform does not boast the reputation of Coinbase or Binance, but it is still one of the most reliable on the market. Or so it seemed.

Gemini currently also acts as a cryptocurrency custodian, and the sustained market downturn had not helped the company at all, but now the platform of twins Tyler and Cameron Winklevoss seems more than a little troubled.

Worrying withdrawals on Gemini

Any news on the subject? Not much yet, but the path does not seem very different from BlockFi’s.

Gemini’s reaction was almost immediate, with a stop to withdrawals which, however, seems to have been revised not too long afterwards, on 16 November.

This, however, does not make the situation any better and could be a kind of red herring, although we cannot be sure.

The only thing we do know is the amount of withdrawals that have seen Gemini sink more and more in recent days.

Users seem to have withdrawn up to USD 485 million in a single day!

In just seven days since the collapse of the BSF company, it appears that the Gemini exchange has experienced cryptocurrency withdrawals of USD 682 million.

Worrisome? Let’s say so, considering that another company linked to the Winklevoss brothers also seems to have generated this backlash.

Cryptocurrencies? Today they also worry Genesis

Fate seems to want to take back all that good fortune with which it has coated some of the most committed players in the crypto sector.

Genesis Global Capital is part of Genesis, in particular the core of the cryptocurrency lending programme that connects digital assets to institutional investors.

Founded in 2013, it quickly became one of the leaders in the field of cryptocurrency financial services, but today it seems to be suffering from the severely bearish crypto market and the fall of the latest giants in the sector.

The reaction has not been much different from that of its partner Gemini.

Genesis, another collapse

That’s right, the third company set to fall could be the crypto lending arm, Genesis Global Capital.

The chain reaction generated by the fall of FTX prompted this company to block user withdrawals just last week.

But in the meantime? Well, nothing good. Although the company continues to claim that it does not want to resort to Article 11 (relating precisely to bankruptcy), we know that it is trying to raise around USD 1 billion from investors, without yet having reached its goal.

This speaks volumes about what awaits Genesis should it fail to raise the necessary funds, or even if these are not enough to pay out the sums owed to creditors anyway. Not to mention the users’ money also at risk!

Read also: Is it still worth investing in cryptocurrencies with the sector in crisis? Here are some predictions

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