Genesis says they are having “constructive conversations with creditors” to avoid filing for bankruptcy.
Cryptocurrency lending company Genesis has denied rumors about an “imminent” bankruptcy filing, in case they are not able to cover the $1.000 billion shortfall caused by the fall of FTX.
Is Genesis thinking about filing for bankruptcy?
Rumors of an “imminent” bankruptcy come from a report published by Bloomberg. In it, it is explained that the company would have difficulties raising funds with which to cover the operations of its credit unit.
The report points to two sources close to Genesis, who have explained that Digital Currency Group, the parent company, does not want to sell parts of its portfolios. It is also not willing to sell Grayscale, as it represents a solid source of income for the company.
From Genesis, they have been quick to deny these rumors and have explained that other options are being studied. According to company spokespersons, they would be maintaining “constructive conversations” to find new solutions to the problem and thus avoid declaring bankruptcy.
Last week, Genesis announced that it was temporarily suspending withdrawals of funds of its clients, due to a “unprecedented market turmoil”, sparked by the FTX debacle. A few days earlier, the company had revealed that they had $175 million committed to an FTX trading account.
Genesis needs $1.000 billion to survive
After pausing withdrawals, Genesis announced that needed to raise $1.000 billion to cover the deficit caused by FTX.
At first, rumors arose that Binance could rescue the company and avoid bankruptcy. However, information from The Wall Street Journal suggests that the exchange would have refused to participate in the rescue.
According to this information, Binance would have given up the investment because Genesis' business model poses a conflict of interest for the company, which has opposed cryptocurrency lending protocols on several occasions.
Meanwhile, Genesis continues to look for investors and has entered into talks with other players in the sector such as Apollo Global Management.
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