Crypto brokerage firm Genesis is struggling to raise fresh capital for its lending unit and has warned potential investors that it may need to file for bankruptcy if its efforts are abortive, Bloomberg reported Monday, citing people with knowledge of the matter.
The report comes just days after Genesis announced that its lending unit Genesis Global Capital suspended withdrawals due to “abnormal withdrawal requests” on its platform, which stemmed from bankrupt crypto exchange FTX’s contagion.
Genesis Seeks $1 Billion in Fresh Capital
According to the report, since the withdrawal suspension, Genesis has been seeking at least $1 billion in fresh capital to solve liquidity issues at its lending unit which includes discussion over a potential investment from leading cryptocurrency exchange Binance, but all efforts to raise the capital have “failed to materialize” so far.
“We have no plans to file bankruptcy imminently. Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors,” a representative for Genesis said in a statement.
Per reports, as part of its efforts to raise the fund, Genesis has also reached out to several industry firms including private equity firm Apollo Global Management. Some reports also claim the brokerage firm has reduced its funding target by 50% from $1 billion to $500 million.
Crypto Firms Struggle Following FTX Fiasco
Meanwhile, the dramatic collapse of FTX earlier this month has spread contagion across the industry, dragging down the prices of major crypto assets and leading to several crypto firms struggling to stay afloat. Genesis is just one of the victims that have been caught up in the FTX drama.
Coinfomania reported this month that crypto lending firm BlockFi is preparing for potential bankruptcy following FTX collapse. The report follows the lender’s decision to suspend withdrawals on its platform citing a “lack of clarity” over the status of FTX and its sister company Alameda Research.
Just recently, it was reported that a Hong Kong-based crypto retailer Genesis Block is also closing down its over-the-counter (OTC) trading services amid the FTX fiasco.
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Source: https://coinfomania.com/genesis-could-file-for-bankruptcy/