Crypto firm warns of bankruptcy without funding

Digital-asset brokerage Genesis is struggling to raise fresh cash for its lending unit and it’s warning potential investors that it may need to file for bankruptcy if its efforts fail, according to people with knowledge of the matter.

Genesis has spent the past several days seeking at least Us$1bil (Rm4.57bil) in fresh capital, said the people, who asked not to be identified because the discussions are private.

That included talks over a potential investment from crypto exchange Binance, they said, but funding so far has failed to materialise.

The rush for funding was precipitated by a liquidity crunch at the lender after the sudden collapse of FTX, one of the world’s largest crypto exchanges.

Genesis halted redemptions shortly after revealing on Nov 10 that it had Us$175mil (Rm800mil) locked in an FTX trading account.

“We have no plans to file for bankruptcy imminently,” a representative for Genesis said in an emailed statement.

“Our goal is to resolve the current situation consensually without the need for any bankruptcy filing.

“Genesis continues to have constructive conversations with creditors.”

Other platforms are facing their own struggles as redemption requests roll in after FTX’S bankruptcy filing roiled the crypto sector and left investors on edge about the risk of contagion.

Genesis is a counter party to many in the digital-asset space and is closely watched as a gauge of the industry’s strength.

It’s among the crypto lenders that are feeling acute strain after a prolonged rout in virtual-coin prices amid multiple high-profile blowups.

The difficulties at Genesis have also buffeted the billionaire Winklevoss twins, Tyler and Cameron, owners of the Gemini crypto exchange.