Collapse of FTX, since its bankruptcy filing, was significant enough to tremble the crypto industry. Many prominent companies had ties with Sam Bankman-Freid’s crypto exchange. Its decline was likely to impact the other players in the crypto space in connection with the firm. Genesis Global Trading is also one such prominent firm facing troubles in the wake of FTX bankruptcy filing.
Genesis Global Trading is up to move towards a potential bankruptcy as an option in order to seek fresh capital. Earlier the lending unit of Genesis, Genesis Global Capital reported to halt the operation on the platform related to the withdrawals. The action is said to have come after the FTX collapse.
Several reports noted Genesis made possible efforts to raise capital from firms including major crypto exchanges. However, the deal could not get closed given the conflicts of interest between the entities.
No Bankruptcy Plan for Genesis
A Genesis representative explained to a news outlet that the company has no plans for filing a bankruptcy right away. Rather, Genesis is planning to resolve the situation with a mutual understanding that would not need filing of bankruptcy. The company would indulge in the continued conversation with its creditors.
Amidst the rumors of Genesis potential bankruptcy filing, the already struggling cryptocurrency market, especially bitcoin (BTC), witnessed a drop. On Monday, BTC dropped to the recent low of 15,599 USD.
Bitcoin experienced the tumble given the Genesis’ connection to the well known bitcoin fund Grayscale Bitcoin Trust (GBTC). Both the entities have a similar parent company which is Digital Currency Group (DGC).
Grayscale to Experience Heat of the Bankruptcy Wildfire
Grayscale holds about 3% of overall bitcoin in circulation which, according to its recently shared data, accounts for 635,235 BTC.
The rumors started taking place that GBTC could reduce its bitcoin holdings in order to generate liquidity for helping its beleaguered sister company Genesis. GBTC stock price got affected for the same where it dropped up to 5% in a day.
Although the bitcoin fund clarified that it is not up to take any such action for that matter. All the bitcoin deposits are safe with the fund.
Bitcoin and other cryptocurrencies within the global crypto market are going through a similar situation. Since the start of this year, the broader crypto market continued to see a stagnant drop. There remained multiple reasons including Federal Reserves interest rates hike, uncleared possibilities of crypto regulations, Terra (LUNA) collapse and recent hit came as the one of the biggest crypto exchanges FTX filed for Chapter 11 Bankruptcy.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2022/11/23/bitcoin-price-tumble-amidst-genesis-potential-bankruptcy-news/