After its lending arm suspended services last week and spent the weekend on fruitless fundraising efforts, crypto industry stalwart Genesis Trading has warned that it may be facing bankruptcy, Bloomberg has reported.
Genesis launched the first over-the-counter Bitcoin trading desk in 2013, going on to become one of the industry's largest players. But in the wake of the catastrophic failure of FTX, the company was facing "abnormal withdrawal requests" and was casting about for a $1 billion bailout last week.
Genesis joins a growing list of cryptocurrency companies facing collapse after the fall of FTX, but despite the report, the company said it has no such plans.
"We have no plans to file bankruptcy imminently," a representative for Genesis told Decrypt. "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 firm first brought its financial troubles to light on November 16, 2022, when the company said on Twitter that "abnormal withdrawal requests" exceeded its current liquidity, citing the collapse of FTX.
However, FTX has created unprecedented market turmoil, resulting in abnormal withdrawal requests which have exceeded our current liquidity.
— Genesis (@GenesisTrading) November 16, 2022
"In consultation with our professional financial advisors and counsel, we have taken the difficult decision to temporarily suspend redemptions and new loan originations in the lending business," the firm wrote.
A spokesperson for Genesis told Decrypt at the time that it "had been exploring all possible options amidst the liquidity crunch resulting from the FTX news.”
“After reviewing a number of options, we made the difficult decision to temporarily suspend redemptions and new loan originations in the lending business so that we can identify the best solution and outcome possible for clients,” the company said.
FTX filed for bankruptcy on November 10, sparking a rash of crashes and warnings across the crypto space. Five days later, Gemini warned its Gemini Earn users that there would be delays in processing withdrawals. When Genesis paused withdrawals entirely, the move led to a 75% spike in the market lending rate for the Genesis Dollar (GUS), which was attributed to a selloff and possible moves to short the asset.
The last public statement from Genesis was posted to Twitter on November 16 as withdrawals were paused, the subsequent silence sparking concerns of a spreading "crypto contagion."