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Genesis: another crypto company under investigation

Genesis Global Capital, lender of the Genesis Trading platform, like many companies in the crypto world has been affected by the aftermath of the FTX bankruptcy and is now under investigation. 

Being a victim of contagion for regulators can also mean involvement in the affair and that is how many states are filing investigations against some companies, especially Genesis after the FTX bankruptcy. 

In order to provide better service to its investors but most likely to protect itself from a possible wave of withdrawals, Digital Currency Group, the company that heads Genesis stated that the platform for a while had decided to suspend withdrawals and loans to users (just as a precaution). 

According to state regulators Genesis Global Capital may be in the running in some malfeasance and is investigating to unravel the matter. 

Several states open investigation into crypto lender Genesis

According to Barron’s, the Alabama Securities Commission and other US states have launched investigations into FTX and a number of other exchanges (Genesis above all) as a result of the contagion. 

Joseph Borg, director of the Alabama Securities Commission confirmed that the investigations are ongoing. 

“The interdependencies and interlocking connections in the crypto space.”

This is what Borg expressed to Barron’s. 

The main issue is unearthing any wrongdoing be it on corporate composition, tax issue, hedging and, last but not least, state securities laws now that Pandora’s box has been opened. 

Genesis is not the only company under investigation; it is part of a larger investigation involving other exchanges and even other states. 

Such is the case with Binance, for example, which, as Bloomberg has revealed is under investigation in Singapore by Asian regulators. 

Following the deal in which the exchange of SBF (Sam Bankman-Fried) found itself, in order not to run into trouble, Genesis had applied for a $1 billion loan in order to be ready for a possible “bank run.”

According to The Wall Street Journal, Genesis reportedly made the request to Binance itself and the private equity firm Apollo Global Management.

“Binance has decided not to invest, fearing that some of Genesis’ assets could create a long-term conflict of interest, according to one of the people familiar with the matter.”

This was CZ’s response to the request for relief. 

Through a statement, taking note of the situation, Genesis wanted to be clear. 

In a statement to investors, it stated that by 21 November, there could be a possibility of bankruptcy if the extreme attempt to raise capital failed.

Genesis would be in favor of an amicable settlement rather than incurring Chapter 11:

“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.”

Barry Silbert, CEO of Digital Currency Group, wrote to investors trying to reassure everyone by stating that although Genesis has a $575 million hole, DCG has a solid foundation to meet both this and future challenges. 

“We have weathered previous crypto winters and, while this one may feel more severe, collectively we will come out of it stronger.”

Genesis and DCG had also been hit by the Three Arrows Capital (3AC) affair that created a $2.3 billion hole to the company’s coffers. 

George Michael Belardinelli
George Michael Belardinelli
A former corporate manager at Carifac Spa and later at Veneto Banca Scpa, blogger and Rhumière, over the years he has become passionate about philosophy and the opportunities that innovation and the media make available to us, in particular the metaverse and augmented reality