Genesis protocol, the lending arm of Genesis Global Capital, suspended withdrawals last week. This was due to an influx of withdrawal requests from users and a lack of liquidity.
It was revealed that the firm had requested $1 billion from investors before suspending withdrawals on Wednesday.
Genesis is in a liquidity crisis as a result of the fall of FTX and 3AC. The firm had $2.3 billion with the crypto hedge 3AC and $175 million with FTX. A spokesperson for Genesis told Cointelegraph:
“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 $1 billion emergency loan requested by Genesis has yet to be approved and has been slashed by 50%.
Genesis approached Binance and Apollo Global Management for assistance with the loan. But, Binance has refused to invest in the Genesis Protocol.
According to the Wall Street Journal:
“Binance decided not to invest, fearful that some of Genesis’s business could create a conflict of interest down the line, according to one of the people familiar with the matter.”
Apollo Global Management has yet to say whether they will assist Genesis. The company had warned its investors about the risks of not raising enough money to pay users. Given these developments, there are valid fears that the company may declare bankruptcy.
The catastrophic collapse of top crypto firms this year has caused ripple effects in various projects and businesses. Investors are panicking because no one knows which exchange or protocol will declare bankruptcy next.
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