The fallout from the FTX fiasco could also topple crypto brokerage Genesis, which has warned customers it may need to file for bankruptcy unless it can urgently secure additional funding, according to reports published by Bloomberg and the Australian Financial Review.
An unidentified person cited in reports claims Genesis has been in talks with companies including crypto exchange Binance, in an attempt to raise US$1 billion in new capital for its lending arm, but with no success so far.
While FTX and its disgraced CEO Sam Bankman-Fried had a broad footprint of associated ventures, Genesis’ troubles seem to have arisen as a consequence of the overall market turmoil caused by the exchange’s collapse.
Bankruptcy Warning Lending Liquidity Issues
Genesis offers digital asset trading, derivatives, lending and custody services and posted third-quarter results in 2022 showing it had US$2.8 billion in total active loans.
On November 16, Genesis tweeted it was temporarily suspending redemptions and new loans for its lending business because FTX’s collapse and reduced market confidence had led to “…abnormal withdrawal requests which have exceeded our current liquidity.”
Genesis had previously clarified that while it had around US$175 million in locked funds in its FTX trading account, “our operating capital and net positions in FTX are not material to our business.” Upon halting loans it reiterated that its spot and derivatives trading and custody businesses remained operational.
It said at the time it was working on a plan for its lending arm, including sourcing new liquidity:
It’s clear those efforts have not paid off yet. While it seems there’s no immediate plan to file for bankruptcy, Genesis’ shaky position has further destabilised crypto markets — Bitcoin’s price dipped briefly immediately following the news.
Disclaimer:
The content and views expressed in the articles are those of the original authors own and are not necessarily the views of Crypto News. We do actively check all our content for accuracy to help protect our readers. This article content and links to external third-parties is included for information and entertainment purposes. It is not financial advice. Please do your own research before participating.
Credit: Source link
