Michael Moro, the CEO of Genesis, said on Wednesday that the crypto brokerage had been exposed to the now-defunct hedge fund Three Arrows Capital (3AC).
Once 3AC was unable to meet margin call criteria on a loan, Genesis sold assets and hedged downside, according to a series of tweets from Moro.
On June 18, Moro disclosed that a counterparty—confirmed to be 3AC—had failed to meet Genesis’ margin call.
More exposed crypto lenders and brokers are disclosing losses, and on Wednesday, the vulnerable Voyager Digital Ltd. filed for bankruptcy, adding to the snowball impact of 3AC’s insolvency.
The quantity of Genesis’ loans or the losses linked with them have not been made public, but Moro noted that the parent company of Genesis, the Digital Currency Group, has taken on some obligations to ensure that business activities would continue.
Genesis’ exposure to 3AC and the Hong Kong-based lender Babel Finance might cost the company “hundreds of millions.”