FTX Tsunami: Genesis Trading, Silvergate Bank, and Coinbase Bonds Getting Hammered in Crypto Fallout

Crypto markets are being weighed down by stress and all the madness surrounding the massive collapse of FTX. Everything crypto is under scrutiny these days. Traders are closely watching Genesis Trading, Silvergate Bank, and Coinbase Bonds. Nothing seems safe from the FTX tsunami.

Is crypto lender Genesis Trading now on its last legs? Some observers say the company is next on the “chopping block.” The company announced that it desperately needs a $1 billion liquidity injection to stay afloat. It also tried to calm fears by announcing on Nov. 29 that its lawyers were looking for a way to avoid a bankruptcy filing. 

Genesis Trading is vital to the world of crypto. It represents the “backbone infrastructure of the institutional investor base in the bitcoin and broader crypto markets. For lending, trading, hedging, exchange yields and more, Genesis Trading was the brokerage to facilitate all of this activity in the space,” Bitcoin Magazine reported.

Its dire situation is due to the collapse of FTX as Genesis had nearly $175 million locked in a trading account with FTX. 

“Our goal is to resolve the current situation in the lending business without the need for any bankruptcy filing,” a Genesis spokesperson told Reuters.

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Silvergate Capital is also seeing its share of troubles as its shares slide as FTX bankruptcy attracted short sellers, Bloomberg reported.

Silvergate is a provider of financial infrastructure solutions and services for the digital currency industry.

The bank’s shares slumped as investors were worried about the bank’s ties to the bankrupt FTX cryptocurrency exchange, even though Silvergate says it has no dealings with FTX.

“We didn’t have any type of relationship with FTX, Alameda Research or any of the other entities other than the deposit relationship,” Silvergate Chief Executive Officer Alan Lane said on a conference call.

As far as CoiNBAse, observers are wondering if it will survive until its bonds mature in 2026.

CoiNBAse saw its convertible bond yields surge as prices plummeted this month amid ongoing fallout from FTX’s bankruptcy, Blockworks reported.

Coinbase’s bond fell to an all-time low of 53 cents on the dollar during the week of Nov. 20, a level typically associated with distressed debt. 

“Coinbase bonds look cheap to their stock,” trader Greg Foss said. “I would short Coinbase equity versus long bonds.”