Criptobroking company Genesis may file for bankruptcy

We reported last week that the Genesis could fall as a result of the collapse of the FTX. On November 16, Genesis suspended withdrawals for institutional customers. Genesis is warning that it may have to file for bankruptcy protection without new funding.

According to a report from Bloomberg, the lending giant told investors it needed to file for bankruptcy as it seeks funds for its crypt-lending unit Genesis Global Capital. The company is trying to raise $1 billion, including talks with Binance, but talks have so far failed to materialize, according to Bloomberg.

The Genesis coin-lending unit said last week it was suspending withdrawals and originations in its lending business. The unit has 2.8 billion in total active loans and serves an institutional client base as of the end of the third quarter of 2022.

Genesis also took to social media to announce the suspension of redemptions and new loan originations. Genesis said that FTX has created unprecedented market turmoil, which has resulted in abnormal withdrawal requests that have exceeded our current liquidity. In a thread post, the company said:

The default of 3 AC negatively impacted the liquidity and duration profiles of our lending entity, Genesis Global Capital. Since then, we have been de-risking the book and shoring up our liquidity profile and quality of our collateral. FTX has created market turmoil that has resulted in abnormal withdrawal requests that have exceeded our current liquidity. The announcement came just three months after the lending giant laid off 20% of its workforce. The CEO also left the company. Genesis had previously revealed it had a $175 mm exposure to FTX.

After exposing itself to the now-bankrupt Three Arrows Capital, the criptobroking company Genesis was the latest victim of a $2 trillion digital-asset market wipeout. On Wednesday, Genesis announced its CEO Michael Moro is stepping down and the company is cutting 20% of its 260-person workforce or 52 jobs.

Derar Islim, who joined Genesis in 2020 and oversees the development of strategy and key core functions, will take over as interim CEO while the company searches for a permanent replacement, the company said in a statement.