Genesis, a digital assets financial services firm, may be in hot water as it looks to raise fresh capital for its lending unit or potentially face bankruptcy if it can’t, according to a report by Bloomberg.
“We have no plans to file bankruptcy imminently,” a Genesis spokesperson said in an emailed statement to TechCrunch on Monday. “Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors.”
According to The Block, sources shared that Genesis cut its capital raise target 50% from $1 billion to $500 million, as it may face bankruptcy without the funding.
Genesis was facing a liquidity crisis after FTX collapsed, which “created unprecedented market turmoil, resulting in abnormal withdrawal requests which have exceeded our current liquidity,” it shared in a series of tweets last Wednesday. The firm decided to “temporarily suspend redemptions and new loan originations in the lending business.” The suspension has not been lifted since.
Prior to that, the firm tweeted on November 10 that it had $175 million in “locked funds” in its FTX trading account but tried to reassure users that the locked amount “does not impact our market-making activities.”
This news comes at a time when the crypto industry is facing extreme stress and volatility from the downfall of FTX, previously one of the largest crypto exchanges by volume, which filed for bankruptcy 10 days ago. An additional 130 affiliated companies, including FTX US and Alameda Research, also began the bankruptcy process, the company stated at the time.
This story is developing and may be updated as new information arises.