- Genesis is facing a liquidity crunch after a torrent of withdrawals due to the FTX collapse.
- Genesis has had exposure to bankrupt firms – FTX and 3AC.
Crypto lender Genesis turned up to clearly state that they have no intention to immediately file for bankruptcy. The Digital Currency Group-owned brokerage declared this through an email statement, as reported by Bloomberg. Genesis opts to do outreach to investors and clients seeking credits for recovery.
Genesis spokesperson stated:
“We have no plans to file bankruptcy imminently. 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 crypto brokerage firm failed in its attempt of raising a $1 billion emergency credit from investors. As a result, Genesis Global Trading halted withdrawals on its crypto lending unit. This troubling liquidity crunch is all caused by the FTX collapse. Following FTX’s filing for bankruptcy, the elevated panic triggered the initiation of rapid withdrawals on Genesis’s crypto lending unit.
Crisis Ensued From FTX Collapse
Evidently, the current trouble of Genesis is due to its exposure to insolvent crypto firms – FTX and the ex-crypto hedge fund group Three Arrows Capital (3AC). Notably, Genesis held nearly $175 million worth of funds in its trading account on FTX. Moreover, it has also lent over $2.36 billion to 3AC. This investment and debt sanction invited the threats of insolvency to the doors of Genesis.
In its redemption mission, Genesis, as reported by The Wall Street Journal and Bloomberg, has sent a request to the largest crypto trading exchange Binance for a bailout. As of now, Binance has not confirmed this. Also, WSJ reported that the crypto lender approached the NY-based equity behemoth Apollo Global Management for help.
The aftermath of the FTX collapse is on the trajectory of initiating crypto devastation that has begun engulfing billions of dollars from the market. Regrettably, several crypto firms are on might file for bankruptcy.