Genesis, the crypto brokerage platform that froze withdrawals last week, may resort to bankruptcy if it fails to raise money from potential investors, according to people familiar with the matter.
As reported by BNN Bloomberg, Genesis has spent the past several days attempting to raise $1 billion in capital from potential investors. This backs up a Wall Street Journal report from Friday, which claimed the trading firm was unsuccessful in its endeavor.
Bloomberg stated that Genesis was in talks with Binance for a potential investment, but funding is still “yet to materialize.”
“We have no plans to file bankruptcy imminently,” a representative for Genesis said in an emailed statement to Bloomberg. “Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors.”
Genesis’s lending arm froze redemptions last week after another arm of the company revealed it had lost $175 million within FTX. The latter exchange filed for bankruptcy earlier this month when it couldn’t honor a flood of withdrawal requests made days prior.
FTX now faces a reported shortfall of over $8 billion that it owes to depositors, which include retail clients, institutions, and celebrities alike.
The fallout has caused other firms to suspend withdrawals as well, including BlockFi and Liquid. The former is also exploring potential bankruptcy.
Digital Currency Group (DCG), Genesis’s parent company, provided the broker with $144 million in equity on the day of FTX’s bankruptcy, to help navigate its liquidity trouble.
The cryptocurrency market maker B2C2 also extended a hand to Genesis last Wednesday to purchase some loans from the trading desk’s book.
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