Categories: News

Crypto lender Genesis denies bankruptcy plans after FTX collapse

Genesis’s comments come days after it halted client withdrawals due to liquidity difficulties.

Cryptocurrency lender Genesis has denied that it is close to filing for bankruptcy, days after halting withdrawals in response to the collapse of cryptocurrency exchange FTX.

Genesis said Monday that it has “no plans” to file for bankruptcy in the immediate future and would seek to resolve the situation “consensus.”

“We have no plans to file for bankruptcy imminently,” a spokesperson told Al Jazeera in an emailed statement. “Our objective is to resolve the current situation in a consensual manner without the need to declare bankruptcy. Genesis continues to have constructive discussions with creditors.”

Bloomberg News previously reported that Genesis, which has offices in New York City, London and Singapore, was having a hard time raising new cash for its lending unit and had warned investors it could file for bankruptcy if it didn’t raise additional funds.

The report, citing people familiar with the matter, said the crypto investment bank has spent the past few days trying to raise at least $1 billion in new capital.

Genesis sought investment from cryptocurrency exchange Binance, but the latter rejected the suggestion due to concerns about conflicts of interest, The Wall Street Journal reported Monday, citing people familiar with the matter.

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Genesis also approached private equity firm Apollo Global Management for financing, according to the Wall Street Journal report.

Al Jazeera has contacted Apollo and Binance for comment.

Genesis Global Capital, one of the largest crypto lenders, last week suspended client withdrawals due to what it said was a liquidity shortage triggered by a spike in withdrawal requests following the Sam Bankman-Fried FTX implosion. .

The collapse of FTX, the third-largest cryptocurrency exchange, earlier this month shocked the cryptocurrency industry, prompting accusations of fraud and mismanagement, as well as comparisons to the 2008 collapse of Lehman Brothers.

In an interview with Vox last week, FTX founder Sam Bankman-Fried, who stepped down as chief executive earlier this month, said he regretted his decision to file for bankruptcy protection and accused regulators of failing to protect customers before giving the impression that you are backing down on some of your comments

Bankman-Fried and several celebrities who endorsed FTX are currently facing an $11 billion investor class action lawsuit.

The US Department of Justice and the Securities and Exchange Commission are also reportedly investigating whether Bankman-Fried or his company violated securities law.

Jacky

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