Major crypto broker Genesis Global is battling to raise some desperately needed cash for its lending arm Genesis Trading, with Bloomberg reporting that if its fundraising efforts fail, the firm will be forced to file for bankruptcy.
Last weekend, Genesis attempted to raise US$1 billion from investors, potentially including Binance. The sudden capital raise came following a liquidity crunch caused by FTX’s spectacular implosion. After Genesis failed to raise funds it was forced to halt withdrawals.
“We have no plans to file bankruptcy imminently,” a Genesis spokesperson said in an emailed statement to Bloomberg. “Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors.”
According to The Block, Genesis has slashed its initial US$1 billion raise target to just US$500 million in a bid to secure funding more quickly. Sources added that Genesis’ parent company Digital Currency Group (DCG) is unwilling to sell parts of its venture portfolio or its flagship management fund Grayscale. DCG is reportedly working with bankers from Ducerne Partners LLC.
The financial health of Genesis has become a growing concern for crypto market participants. The firm already suffered a significant blow earlier this year following the implosion of Three Arrows Capital, a crypto hedge fund that filed for bankruptcy in July. According to court documents, Genesis had lent US$2.4 billion to Three Arrows Capital.
Most recently, Genesis reported it still has US$175 million trapped on FTX’s platform and is yet to disclose exactly how much exposure it had to the FTX-linked trading house Alameda Research.
Now, many are concerned that Genesis’ parent company DCG which is made up of a huge number of crypto companies, including the largest crypto asset management firm Grayscale and news outlet CoinDesk, may be in serious trouble.