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Crypto Brokerage Genesis Is Said to Warn of Bankruptcy Without Funding

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(Bloomberg) — Digital-asset brokerage Genesis is struggling to raise fresh cash for its lending unit, and it’s warning potential investors that it may need to file for bankruptcy if its efforts fail, according to people with knowledge of the matter.

Most Read from Bloomberg

Genesis has spent the past several days seeking at least $1 billion in fresh capital, said the people, who asked not to be identified because discussions are private. That included talks over a potential investment from crypto exchange Binance, they said, but funding so far has failed to materialize.

The rush for funding was precipitated by a liquidity crunch at the lender after the sudden collapse of FTX, one of the world’s largest crypto exchanges. Genesis halted redemptions shortly after revealing on Nov. 10 that it had $175 million locked in an FTX trading account.

“We have no plans to file bankruptcy imminently,” a representative for Genesis said in an emailed statement. “Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors.”

A representative for Binance declined to comment.

Other platforms are facing their own struggles as redemption requests roll in after FTX’s bankruptcy filing roiled the crypto sector and left investors on edge about the risk of contagion.

Read more: From Genesis to Gemini, How FTX’s Collapse Signals No One Is Safe

Gemini Trust Co., the crypto platform run by Tyler and Cameron Winklevoss, announced customer withdrawals from its yield-generating product would be delayed, given Genesis’s role as a key partner in the program.

–With assistance from Eliza Ronalds-Hannon, Annie Massa, Rachel Butt and Alyssa McDonald.

Most Read from Bloomberg Businessweek

©2022 Bloomberg L.P.



Read More: Crypto Brokerage Genesis Is Said to Warn of Bankruptcy Without Funding

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