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FTX Collapse: Genesis Denies Being on the Verge of Bankruptcy

Bloomberg News says the brokerage, which was exposed to FTX, warned investors it could file for bankruptcy if it can't raise fresh cash.
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Blur surrounds the future of crypto lender Genesis. 

Bloomberg News reports that the firm has warned investors that it might file for bankruptcy if it does not quickly find fresh cash. Genesis has spent the past several days seeking at least $1 billion in fresh capital, the news outlet reports, citing anonymous sources.

This warning stems from the firm's exposure to the cryptocurrency exchange FTX, which has filed under the bankruptcy laws.

But a spokesperson for Genesis tells TheStreet that the Bloomberg News article is not accurate and that the platform has no intention of filing for bankruptcy.

"We have no plans to file bankruptcy imminently," the spokesperson said by phone and by email. "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 brokerage said last week that it had stopped customers from making withdrawals and issuing new loans. The division that has halted the withdrawals is Genesis Global Capital, which works with institutional clients and had $2.8 billion in total active loans as of the end of the third quarter.

The company had $175 million locked in its FTX trading account. 

Genesis said it has three primary business lines: spot and derivatives trading, lending and borrowing, and custody. 

"Our spot and derivatives trading and custody businesses remain fully operational," the company assured at the time. 

A Genesis bankruptcy filing would also affect the Gemini cryptocurrency exchange founded by twins Tyler and Cameron Winklevoss. Indeed, Genesis is a partner of Gemini.

The overnight implosion of FTX is expected to affect many firms in the crypto industry because the group, founded by Sam Bankman-Fried, was one of the leading players in the crypto sphere.

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