Genesis fails to raise funds as FTX contagion weighs on DCG-owned company

Genesis, a cryptocurrency brokerage, has failed to raise funds and may face bankruptcy if it does not receive further investment, according to Bloomberg on November 21.

Following the suspension of withdrawals from its loan product last week, the corporation is said to be seeking a $1 billion liquidity injection into the business.

Fears of a Genesis bankruptcy have already spread to its parent business, Digital Currency Group. Genesis accounts for a sizable portion of its holdings, along with Grayscale, which has also been criticized for failing to give verification of reserves.

According to a statement provided to Bloomberg,

“We have no immediate plans to declare bankruptcy... Our goal is to address the current issue amicably, without the necessity for bankruptcy. Genesis continues to have productive discussions with creditors.”

The failure of new funds to materialize adds to Genesis' ongoing story of seeking investment. WikiBIT reported on November 17 that it had been struggling to find new investors since the demise of FTX. On the other hand, a Genesis spokesperson told the Wall Street Journal on November 17 that the brokerage was having “very positive conversations.”

According to Genesis CEO Michael Moro, “we mitigated our losses with a large counterparty who failed to meet a margin call to us.” According to WikiBIT research, Genesis has received over $1 billion in FTT tokens in the last three months.

Between June and September of this year, Genesis received approximately 78 million FTT tokens. The tokens were worth approximately $2.3 billion at the time of the transfer. As of press time, the same tokens are worth only $98 million, with the token price reduced from $30 to $1.28. More tokens were transferred in November, totaling 10 million FTT, after the price dropped significantly.

According to the Bloomberg report, the company also disclosed that it had $175 million invested in FTX.

A recent WikiBIT highlighted the potential risk to parent group DCG of Genesis failure. Given that DCG has been unable to intervene to save Genesis, this is a worrying time for the crypto investment behemoth. If Genesis and DCG follow in the footsteps of FTX, the pain in the crypto industry may become much more severe. WikiBIT learned from a project in DCG's portfolio that DCG's failure “would impact us.”

As a reminder, WikiBit is ready to help you search the qualifications and reputation of projects in a bid to protect you from hidden dangers in this risky industry!

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