- Genesis is warning potential investors it may need to file for bankruptcy if it's unable to raise funding for its lending unit, Bloomberg reported.
- The crypto brokerage has been seeking at least $1 billion in fresh capital, said the report that cited unnamed sources.
Crypto brokerage Genesis is warning potential investors it may need to file for bankruptcy protection if it fails to raise fresh funding for its lending unit, Bloomberg reported Tuesday.
One of the largest cryptocurrency brokerages for institutional investors, Genesis over the past several days has been seeking at least $1 billion in new capital, the report said, citing sources with knowledge of the matter.
The report said there were discussions with crypto exchange Binance about a potential investment, but funding so far has failed to materialize. Genesis has also contacted Apollo Global Management in an effort to land an investment, but the private equity firm is unlikely to commit to a deal, according to Bloomberg.
"We have no plans to file bankruptcy imminently," a Genesis representative told Bloomberg 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."
The rush to raise cash by Genesis was precipitated by a liquidity crunch at its lending unit after the implosion of crypto exchange FTX. Genesis halted redemptions shortly after revealing on November 10 that it had $175 million locked in an FTX trading account.
FTX, once valued at $32 billion, collapsed this month in the wake of questions about whether founder Sam Bankman-Fried mishandled client funds, and its failure is reverberating through the cryptocurrency industry. FTX's new management team is slated to appear in a Delaware courtroom on Tuesday for the first time as it pursues bankruptcy protection.
Bitcoin, the world's most traded cryptocurrency, was up 1.5% at $16,022 on Tuesday, but has lost roughly 65% of its value during 2022 as part of a so-called crypto winter for digital assets.