Nexo allays customers’ fears as FTX’s death spiral claims more victims

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Blockchain
Nexo allays customers’ fears as FTX’s death spiral claims more victims

The crypto-lending platform has assured customers that their funds are safe after Genesis’ Crypto-Lending Unit Halted Customer Withdrawals in the wake of the FTX Collapse. The company made this announcement on Twitter on November 16, 2022.

Nexo says funds are ‘SAFU’

Nexo, a centralized lending platform that offers users instant overcollateralized cryptocurrency-backed loans, has taken to Twitter to announce to its community that it has zero exposure to Genesis, Gemini, Luno, and BlockFi following their collapse on the back of FTX filing for bankruptcy.

“We are using this opportunity to remind you that due to our strict risk management, Nexo had $0 exposure to FTX/Alameda, UST/Luna, Three Arrows Capital, Celsius, Babel, Hodlnaut, etc.”

The tweet said.

Earlier today, it was reported that Genesis’ crypto lending arm, which managed around $2.8 billion in total active loans, has halted customer withdrawals and new loan applications due to a liquidity crunch. 

“This decision was made in response to the extreme market dislocation and loss of industry confidence caused by the FTX implosion.”

Said Amanda Cowie, vice president of communications and marketing at Genesis Digital Currency Group (DCG).

Genesis also suffered significant losses earlier this year due to the failure of hedge fund Three Arrows Capital (3AC).

As a result of Genesis’ implosion, Gemini, a crypto finance service that had invested customer funds in Genesis via its Earn program, also put out an announcement to its users that its Earn product will no longer be able to meet up with its service-level agreement (SLA) of five business days on loans.

Nexo shuts down insolvency rumors

The Swiss-based crypto platform had to put out the notice to its community following rumors that the lending platform had become insolvent when its website stopped displaying the real-time audit of its assets versus liabilities earlier today.

Nexo quickly put the rumors to bed, saying that similar oracle technical difficulties have happened in the past and that it had already reached out to Armanino regarding the malfunction.

“With previous such downtimes of the Armanino real-time attestation, the problem was resolved promptly within a day.”

A Nexo representative told correspondents.
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Ogwu Osaemezu Emmanuel

Ogwu Osaemezu Emmanuel is a graduate of Mass Communication and Media Studies. He joined the blockchain movement in 2016 when a friend of his introduced him to an investment platform accepting bitcoin. He has never looked back since then. Emmanuel believes the world needs real change and freedom from poverty. He sees crypto and the underlying distributed ledger technology as the catalyst to a better future for all.