​Here's how 'market contagion' spreads...

In the words of Ron Swanson:

"There's only one thing I hate more than lying: skim milk. Which is water that's lying about being milk."

A crypto lending firm known as Genesis Global Capital have halted trading on their platform, due to exposure from the FTX collapse.

...after claiming "our exposure to FTX has no impact on our ability to serve clients," just last week.

That tweet? It's skim milk and it's what perpetuates 'market contagion.'

Which works like this:

A big player collapses (like FTX) → people try to get their money out (they can't) → folks wonder if the other platforms they use are about to fall too...

These other platforms try to convince everyone they're fine (and they might well be, in the moment) → but folks pull their money out anyway...

The platforms have too much money tied up elsewhere to meet heightened withdrawal demand → they halt trading → customer distrust is validated and perpetuated.

It's all very Darwinian...

The cycle only ends once all of the vulnerable companies are shaken out and the strong are left standing.

Grim! But now you know.