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FTX fallout: Gemini Earn freezes withdrawals – who is affected and when can funds be redeemed

By Capital.com News

Edited by Charlie Mellor

14:22, 16 November 2022

Gemini logo
Gemini warned of withdrawal delays on its Earn product after lending partner Genesis suspended redemptions and lending obligations – Photo: Shutterstock

The cryptocurrency platform Gemini halted withdrawals for its crypto lending Earn program as the fallout from the collapse of crypto giant FTX continued today. 

Gemini’s announcement came moments after news spread that Genesis Global Capital – its lending partner for the Earn project – had temporarily suspended redemptions and new loan originations. Genesis, in turn, cited the recent market turmoil caused by the collapse of FTX as a reason for the freeze.

Gemini Earn is a lending program that lets users lend cryptocurrencies to certain institutional borrowers and earn interest.

The freeze does not affect other Gemini products and withdrawals from the Gemini exchange are available “at any time”, said Gemini in a blog post.

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‘FTX has created unprecedented market turmoil

Gemini’s warning of withdrawals delays immediately followed a similar announcement from Genesis Global Capital’s lending unit. 

“We are aware that Genesis Global Capital, LLC (Genesis) – the lending partner of the Earn program – has paused withdrawals and will not be able to meet customer redemptions within the service-level agreement (SLA) of five business days,” said Gemini. 

ETH/USD

3,648.30 Price
+17.930% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

XRP/USD

0.54 Price
+4.920% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

BTC/USD

69,786.10 Price
+5.220% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

BCH/USD

509.50 Price
+4.540% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.50

Genesis quoted FTX as a reason for its decision to suspend redemptions and lending obligations. “FTX has created unprecedented market turmoil, resulting in abnormal withdrawal requests which have exceeded our current liquidity,” Derar Islim, interim CEO at Genesis, told clients on a Wednesday morning call according to media reports.

A follow-up statement on Genesis’ Twitter account echoed the sentiment: “This decision was made in response to the extreme market dislocation and loss of industry confidence caused by the FTX implosion.” 

FTX, Genesis, Gemini domino effect

Gemini did not cite FTX specifically, but it did allude to the FTX-sparked market turmoil: “The past week has been an incredibly challenging and stressful time for our industry,” it said. Gemini added:

“We are disappointed that the Earn program SLA will not be met, but we are encouraged by Genesis’ and its parent company Digital Currency Group’s commitment to doing everything in their power to fulfill their obligations to customers under the Earn program.

“We will continue to work with them on behalf of all Earn customers. This is our highest priority. We greatly appreciate your patience.”

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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