Cryptocurrency broker Genesis warns of bankruptcy due to liquidity crunch

Digital belongings dealer Genesis is struggling to boost money for its lending unit and has warned potential traders that it might must file for chapter if its efforts fail.

Genesis has spent the previous a number of days searching for not less than $1 billion in new capital, in response to sources. That included talks over a possible funding from cryptocurrency alternate Binance, they mentioned, however funding has thus far didn’t materialise.

The frenzy for funding was precipitated by a liquidity crunch on the lender after the sudden collapse of FTX, one of many world’s largest cryptocurrency exchanges.

Genesis halted redemptions shortly after revealing on November 10 that it had $175 million locked in an FTX buying and selling account.

“Now we have no plans to file chapter imminently,” a consultant for Genesis mentioned. “Our objective is to resolve the present state of affairs consensually with out the necessity for any chapter submitting. Genesis continues to have constructive conversations with collectors.”

A consultant for Binance declined to remark.

Different platforms are dealing with their very own struggles as redemption requests roll in after FTX’s chapter submitting shook the cryptocurrency sector and left traders on edge concerning the threat of contagion.

Genesis is a counterparty to many within the digital asset area and is carefully watched as a gauge of the business’s power.

It’s among the many cryptocurrency lenders underneath acute pressure after a chronic rout in digital coin costs amid quite a few high-profile blow-ups.

The difficulties at Genesis have additionally buffeted the billionaire Winklevoss twins, Tyler and Cameron, homeowners of the Gemini cryptocurrency alternate.

In response to Genesis suspending withdrawals, Gemini halted redemptions from its Earn product. That left in limbo a programme that, in response to a supply, has $700 million in buyer funds tied up in it.

Up to date: November 22, 2022, 6:58 AM