Genesis Warns Investors of Possible Bankruptcy Without Fresh Funding After FTX Collapse: Report
Digital asset brokerage Genesis is struggling to raise fresh cash for its lending unit, and the firm has warned potential investors that it may need to file for bankruptcy if its efforts end up to no heed, according to a Bloomberg News report. The firm has faced a liquidity crunch since FTX filed for bankruptcy earlier this month and has reportedly been trying to raise at least $1 billion (roughly Rs. 8,118 crore), having approached both Binance and Apollo Global Management. The possible bankruptcy also underscores how FTX’s collapse sent shockwaves through the wider crypto ecosystem that are showing no signs of abating.
“We have no plans to file bankruptcy imminently,” a representative for Genesis said in a statement to Bloomberg. “Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors.”
The rush for funding was precipitated by a liquidity crunch at the lender after the sudden collapse of FTX, one of the world’s largest crypto exchanges.
Genesis Global Capital, the lending business of Genesis Trading, last week temporarily suspended redemptions and new loan originations in the wake of FTX’s collapse and the implosion of Three Arrows Capital earlier this year. At the time, parent company Digital Currency Group said business operations at DCG and its other wholly owned subsidiaries were not affected.
DCG gave Genesis Trading an equity infusion of $140 million (roughly Rs. 1,136 crore) after it said its derivatives business had $175 million (roughly Rs. 1,420 crore) locked up on the FTX platform. “Genesis has no material exposure to FTT or any other tokens issued by centralised exchanges,” the firm said in a tweet on November 9.
The news shook crypto investors as Bitcoin extended its intraday slump to as low as $15,649 (roughly Rs. 12.7 lakh), though the token has since erased some of those losses, priced currently at $15,732 (roughly Rs. 12.77 lakh).