Crypto Three Things (11/16)

Wednesday, Nov 16th 2022

Commentary

“Patience and diligence, like faith, remove mountains.” ― William Penn


1) Genesis Halts Withdrawals: Crypto brokerage firm Genesis suspended withdrawals and new loan originations at its lending business. While its spot and derivatives trading and custody services are operating normally, the lending arm, which processed $8.4B in third-quarter loan originations, failed to meet an “abnormal” amount of redemption requests. Genesis CEO Derar Islim said the firm is working to fix its liquidity profile and reopen loan servicing as soon as possible.

Titan’s Takeaway: It’s a trying time for the digital asset space as the cascading effect of FTX’s collapse is testing the financial health of industry players. If Genesis, one of the oldest to play the game, is feeling the burn, others might follow suit if the contagion isn’t halted soon.

2) Yellen Calls for Careful Regulation: U.S. Treasury Secretary Janet Yellen stressed the need for clear and “very careful regulation” in the wake of FTX’s failure. In an interview with Bloomberg, the Treasury Secretary said the recent events, especially the practice of lending client funds to another entity for leveraged bets, showed the “weakness of the sector.”

Titan’s Takeaway: Without a doubt, the lack of segregation of customer assets tilted FTX into insolvency. We believe that clear and viable rules that integrate crypto with traditional finance will help bring safety and security to both firms and clients.

3) Trezor Reports Surge in Wallet Sales: Hardware wallet company Trezor is seeing a 300% uptick in sales revenue week-on-week as users scramble to find safety amid concerns of crypto contagion. Current product demand, the company said, is higher than a year ago when Bitcoin’s relentless rally lifted its price to an all-time high near $69,000.

Titan’s Takeaway: The spike in hardware wallet sales indicates that users are 1) unwilling to trust exchanges and 2) looking for a safe place to wait for the storm to pass. With BlockFi and Voyager threatening to exacerbate the contagion, holding out might be the only reasonable thing to do.

As of this writing, BTC was a portfolio holding of Titan. This security may cease to be a portfolio holding at some point in the future.
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