Genesis Trading, a pioneer in the cryptocurrency industry, has issued a warning that it may be in bankruptcy after its lending arm ceased operations last week and spent the weekend trying to raise money without success.
In 2013, Genesis opened the first over-the-counter Bitcoin trading desk. Since then, it has grown to be a major participant in the market. However, following FTX’s disastrous collapse, the business was dealing with “abnormal withdrawal demands” and was looking for a $1 billion loan last week.
Following the collapse of FTX, an increasing number of cryptocurrency firms are in danger of going under. Despite the allegations, Genesis claims it has no such intentions.
“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.”
On November 16, 2022, the company tweeted that “abnormal withdrawal demands” had surpassed its available liquidity, claiming the collapse of FTX as the reason for the problem.
“In consultation with our professional financial advisors and counsel, we have taken the difficult decision to temporarily suspend redemptions and new loan originations in the lending business,” the company stated.
At the time, a Genesis spokeswoman stated that the company “had been evaluating all viable possibilities” despite the liquidity crisis brought on by the FTX announcement.
“After reviewing a number of options, we made the difficult decision to temporarily suspend redemptions and new loan originations in the lending business so that we can identify the best solution and outcome possible for clients,” she said.
On November 10, FTX declared bankruptcy, causing a wave of crashes and alerts throughout the cryptocurrency industry. When Genesis stopped all withdrawals, the market lending rate for the Genesis Dollar (GUS) increased by 75%, which was linked to a selloff and potential movements to short the asset.
Genesis’ final public comment was published on Twitter on November 16 when withdrawals were halted, and the following silence raised worries about a “crypto contagion” spreading on.