Genesis Denis Bankruptcy Rumors! Here is the complete truth
With the warning signs of strain at Genesis Trading, a digital asset financial services company, Bitcoin remained below $16,000 on Tuesday morning, just two days after crossing the threshold for the first time in two years.
FTX has sparked severe market volatility as Genesis Trading struggles to raise funding in its current state of turmoil. According to a WSJ report, the crypto lender also asked Binance and Apollo Global Management to bid on the loan portfolio.
What were the warning signs?
- According to the latest procedure, FTX filed for bankruptcy on November 10, which caused a crash in the crypto world.
- Gemini Earn users were notified of withdrawal delays 5 days later.
- Genesis’ decision to stop withdrawals caused a 75% jump in market lending rates for the Genesis Dollar (GUS), which was attributed to a sell-off and suspected shorting.
Despite this, reliable sources claim that Binance has decided not to invest in Genesis at this time. Binance is concerned that some of Genesis’ potential commercial endeavors could lead to a conflict of interest, according to insiders.
However, Genesis had planned to raise $1 billion in new cash. The crypto lender is facing a liquidity shortage due to significant withdrawals on the site. The firm blocked redemptions on Nov. 10, saying it had $175 million locked up in an FTX trading account.
What went wrong?
Early this year, the demise of Three Arrows Capital marked the beginning of Genesis’ (3AC) troubles. A $1.2 billion lawsuit against the hedge fund has been filed by Genesis Global’s parent company, Digital Currency Group. Several insiders also informed IntoTheBlock that Genesis had cut its fundraising goal by 50%, from $1 billion to now $500 million.
How will Genesis’ collapse affect the cryptocurrency market?
Genesis’ position in crypto, links to problematic companies and financial reach increase fears of contagion. Three Arrows Capital, a Singapore-based crypto hedge fund, and FTX affiliate Alameda Research were Genesis’ two largest debtors. Both are insolvent and thus the impact will be much more intense than expected.
Will Genesis file for bankruptcy?
A Genesis spokesperson responded to the recent events by saying the firm has no “imminent” plans to file for bankruptcy. According to the representative:
We will not declare bankruptcy any time soon. Our goal is to find an amicable solution to the current crisis so that bankruptcy proceedings are not necessary. Genesis’ communication with creditors remains positive.
There is no doubt that Genesis is currently in a dire situation. In light of recent events, cryptocurrency exchange Gemini has temporarily suspended its Earn program because Genesis is the Earn program’s lending partner.
The twins so they are working closely with Genesis and the Digital Currency Group on this issue.
“This is our top priority and we know that Genesis and DCG are exploring all options to deliver on their promises to Earn users,” the statement said.
To summarize
There’s a looming question on everyone’s mind: “What if Genesis goes under after FTX?”
This will undoubtedly result in massive chaos that adds to the situation of unrest that already exists, and is likely to lead to an even bigger market correction.
