Neil Wilson recently commented that the need for a capital injection of Genesis shows how interconnected the cryptocurrency world is. Although the crypto lending firm has no plans to file for bankruptcy imminently, the situation seems to be another.
The FTX collapse has also affected crypto lender Genesis, which may file for bankruptcy if it fails to secure new funding. The company said its fundraising goal has dropped from USD 1 billion to USD 500 million after talking with Binance and Apollo.
On November 16th, unprecedented market turmoil following the FTX collapse led Genesis to suspend fund withdrawals temporarily. The firm previously confirmed that around USD 175 million of its funds remained trapped in an FTX account.
Neil Wilson, director of analysis at Markets.com, recently commented on the case of crypto lending firm Genesis. He said its need for a capital injection of USD 1 billion shows how interconnected the cryptocurrency world is.
The news that Genesis was at risk of going bankrupt caused the crypto market to react negatively. For example, the price of Bitcoin (BTC) dropped to USD 15,700 while altcoins followed in its steps.
Meanwhile, Bitcoin is trading at around USD 16,570 and has accumulated a 5% gain over the last 24 hours. While its daily trading volume is above USD 26.74 billion, its market capitalization is about USD 318.05 billion, according to CoinGecko.
Genesis Seeks to Solve the Situation without Going Bankrupt
According to The Wall Street Journal, crypto lender Genesis turned to Binance and Apollo Global Management for help with cash.
However, Changpeng Zhao, the CEO of Binance, refused to invest in the troubled crypto lender. He said he feared that some of the deals of Genesis might create a future conflict of interest.
Global news agency Reuters reported that Genesis had no plans to file for bankruptcy imminently. However, despite their constructive conversations with creditors, the situation seems to be another.
The crypto lending firm said they sought to solve the situation by mutual agreement without having to declare bankruptcy. However, it has not been easy due to the growing fear in the industry after the collapse of FTX.
Binance Refuses to Help Genesis Alleging a Conflict of Interest
Genesis announced that it needs to borrow USD 1 billion due to the liquidity crisis it is undergoing. However, the CEO of Binance told them he did not want to make that investment.
Changpeng Zhao reportedly declined to help fund Genesis due to a conflict of interest with its business model. The crypto lending firm also turned to Apollo Global Management for help with cash.
Genesis had to struggle with a wave of withdrawals following the collapse of FTX. Although the company seems to be about to go bankrupt, it remains optimistic about the future.
All the participants in the crypto industry have somehow felt the effects of the collapse of FTX. This time, Genesis has had to seek help from leading representatives in the community, like Binance and Apollo Global Management.
By Alexander Salazar