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Genesis Trading has launchpad halted withdrawals at its lending unit as the crypto financial services group blamed the “unprecedented market turmoil” sparked by the collapse of Sam Bankman-Fried’s FTX.

Genesis, which plays a key role in digital asset fixed income markets, said its decision to suspend redemptions and new loan originations followed “abnormal withdrawal requests which have exceeded our current liquidity”.

The troubles at Genesis are the latest sign that the failure of Bankman-Fried’s FTX crypto exchange and Alameda Research, his trading firm, is sending shockwaves across the crypto industry. On Wednesday, the US House of Representatives financial services committee announced a hearing into the collapse of FTX and its impact on the crypto market.

New York-based Genesis allows clients to lend out their coins in exchange for yields of as much as 10 per cent, while also providing similar services for groups including exchanges operator Gemini, which is run by twins Tyler and Cameron Winklevoss. Genesis also lends digital coins to institutions such as hedge funds and family offices.

Genesis had $2.8bn of “active loans” at the end of the third quarter of 2022, according to its website. It originated $131bn of loans in 2021.

Its parent company, Digital Currency Group, which is owned by billionaire Barry Silbert, said the suspension of withdrawals “was made in response to the extreme market dislocation and loss of industry confidence caused by the FTX implosion”.

The suspension has also prompted concerns about its business partners. Gemini on Wednesday said it was “aware” of the problems facing Genesis.

Gemini and Genesis are partners on a product that pays customers interest for lending out their crypto assets. Genesis is the main lending partner.

“We are working with the Genesis team to help customers redeem their funds . . . as quickly as possible,” Gemini said.

Another Genesis partner, crypto platform Luno, said its customers’ assets were safe, adding it had “taken steps” to ensure customers could access their funds “in the event withdrawals from Genesis are not possible”.