Genesis fails to raise funds as FTX contagion weighs on DCG-owned company
A weekend hunt for $1B in new funding has come up short for crypto brokerage Genesis as it seeks huge cash injection to stay afloat
Crypto brokerage Genesis failed to raise funds and is potentially facing bankruptcy without additional funding, Bloomberg reported Nov. 21.
The company is rumored to be seeking a $1 billion cash injection into the business after it paused withdrawals on its lending product last week.
Fears of a possible Genesis bankruptcy could now spill over to its parent company Digital Currency Group. Genesis makes up a large percentage of its holdings alongside Grayscale, which has also been in the spotlight for failing to produce proof of reserves.
A statement sent to Bloomberg revealed
“We have no plans to file bankruptcy imminently… Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors.”
The failure of fresh funds to materialize builds on the ongoing story of Genesis seeking investment. CryptoSlate reported on Nov. 17 that the company had been struggling to acquire new investments since the collapse of FTX. However, on Nov. 17, a spokesperson from Genesis told the Wall Street Journal that the brokerage was having “very positive conversations.”
Further, Genesis CEO Michael Moro commented that “we mitigated our losses with a large counterparty who failed to meet a margin call to us.” Research conducted by CryptoSlate has now revealed that Genesis received over $1 billion in FTT tokens over the past three months.
Genesis received roughly 78 million FTT tokens between June and September this year. At the time of the transfer, the tokens were worth approximately $2.3 billion. As of press time, the same tokens are valued at just $98 million, with the token price down from $30 to just $1.28. More tokens, to the tune of 10 million FTT, were transferred in November after the price fell significantly
According to the Bloomberg article, the company also revealed it had $175 million locked into FTX.
A recent CryptoSlate Op-Ed highlighted the potential risk to parent group DCG over the possible failure of Genesis. Given that DCG has not been able to step in to bail out Genesis, it is a worrying time for the crypto investment giant. If Genesis and DCG follow the path of FTX, the pain within the crypto industry could get considerably more extensive. Speaking with a project within DCG’s portfolio, CryptoSlate learned that the failure of DCG “would impact us.”