Genesis, warns of bankruptcy declaration

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Crypto financier Genesis is struggling to raise new funds for its lending arm, warning potential investors that it may have to declare bankruptcy if its efforts fail, according to people with knowledge of the matter cited by Bloomberg.

Genesis has spent the past few days seeking at least $1 billion in new capital, the sources said, with negotiations – including for a possible investment on behalf of cryptocurrency exchange Binance – however this has not – yet – materialised.

Such a strong need for liquidity inflow has arisen due to the “drying up” that followed the sudden collapse of FTX, one of the world’s largest crypto exchanges. Genesis stopped allowing the withdrawal of funds from its customers after it was revealed on its behalf that it held $175 million locked up inside an account on FTX.

“We do not intend to declare immediate bankruptcy,” a Genesis spokesperson said in a written statement. “Our goal is to resolve the current situation without the use of this medium. Genesis continues to have constructive discussions with its creditors.”

A Binance spokesman declined to comment on the matter.

Genesis has reached out to Apollo Global Management, among others, in an attempt to secure investment money, but Apollo is not considered likely to commit to a deal, again according to a Bloomberg source. One option Genesis has proposed was for Apollo to buy part of its loan portfolio.

Genesis is a partner to many players in the digital asset universe and is closely watched as an “indicator” of the strength of the industry.

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