Genesis, a digital asset brokerage struggling to raise fresh cash for its lending arm, has warned potential investors that it may need to file for bankruptcy if its efforts ultimately go unheeded, according to Bloomberg News. FTX, which has been facing a liquidity crunch since filing for bankruptcy earlier this month, has reportedly been trying to raise at least $1 billion (roughly Rs 8,118 crore) and has approached Binance and Apollo Global Management. The possible bankruptcy also highlights how FTX’s debacle has sent shockwaves through the broader crypto ecosystem that show no signs of abating.
“We have no immediate plans to file for bankruptcy,” a Genesis representative said in a statement to Bloomberg. Genesis continues to engage in constructive dialogue with creditors. “
A liquidity crunch for lenders has sparked a funding rush following the sudden collapse of one of the world’s largest cryptocurrency exchanges, FTX.
Genesis Trading’s lending business, Genesis Global Capital, suspended redemptions and new loan originations last week following the FTX collapse and the implosion of Three Arrows Capital earlier this year. At the time, parent company Digital Currency Group said the business operations of DCG and its other wholly-owned subsidiaries were not affected.
DCG injected $140 million (roughly Rs. 11.36 crore) in equity in Genesis Trading after it said its derivatives business had locked up $175 million (roughly Rs. 14.20 crore) on the FTX platform. “Genesis has no material risk to FTT or any other token issued by a centralized exchange,” the firm said. said in a tweet November 9th.
The news stunned cryptocurrency investors as Bitcoin extended its intraday losses to as low as $15,649 (roughly Rs. 1.277 lakh).