Crypto currency exchanges, which is one of the giant’s biggest competitors Binance FTX faced with abnormal withdrawal requests after going bankrupt last week by Genesis Global Capital in the loan department, there has been forced to suspend operations for a remarkable development.
Conflict of Interest Concern
Embattled crypto lending and trading company Genesis Global Capital is still trying to raise cash. According to sources close to the issue who spoke to the WSJ, crypto credit and trading company Genesi reached out to the crypto currency exchange Binance to invest in order to meet the need for cash. Binance turned down the company’s investment request out of concern that some of Genesis’ businesses may cause a conflict of interest in the future.
According to sources close to the matter, the company has also reached out to private equity giant Apollo Global Management for capital assistance.
A Genesis spokesperson, who made a statement on the subject before the Binance and Apollo detail appeared, said, “We have no plans to file for bankruptcy anytime soon. Our goal is to resolve the current situation by consensus without the need for any bankruptcy filing. Genesis continues to hold constructive talks with creditors.”, had announced that they had no intention of filing for bankruptcy yet.
The Company Is Drifting Towards Bankruptcy
Genesis was faced with an influx of withdrawals in its lending arm after the bankruptcy of crypto currency exchange FTX, and announced that it suspended operations in its credit department last week, reporting abnormal withdrawal requests. It was revealed that Genesis requested an emergency loan of $1 billion from investors before announcing to its clients at a brief meeting on November 16 that it was suspending withdrawals and credit purchases. At that meeting, Derar Islim, the interim CEO, stated that Genesis would be presented with a plan for the lending business this week. At this point, Bloomberg reported that Binance was the first party Genesis reached.
Genesis became the latest crypto lending and trading company to stop withdrawals last week following the rapid and sudden collapse of FTX founder Sam Bankman-Fried’s crypto empire. The WSJ had previously reported that Genesis had outstanding loans paid to Alameda Research, the FTX-affiliated trading company founded by Bankman-Fried, in which FTX used its own crypto currency as collateral. Genesis had made a $2.4 billion loan to bankrupt Three Arrows Capital (3AC) earlier this year, according to court documents. Genesis’ parent company, Digital Currency Group, will also receive $ 1.2 billion from the hedge fund.
In August, Genesis laid off 20 percent of its 260-person workforce as part of a restructuring when Michael Moro, who was then acting CEO, left his post. According to the company’s financial statements, Genesis had $2.8 billion in active loans at the end of the third quarter. This figure was $ 11.1 billion in the quarter a year ago, when crypto currency prices almost flew.
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