Genesis Trading is facing a liquidity crisis following the FTX affair, which puts it at risk of bankruptcy. As the company seeks new funding, Binance has reportedly refused to take part in a possible funding round.
Genesis Trading seeks to raise funds to avoid bankruptcy
According to our colleagues at Bloomberg, over-the-counter (OTC) cryptocurrency trading specialist Genesis Trading, has raised the alarm about potential bankruptcy. Indeed, the company is currently looking for new financing following a shortage of liquidity caused by the FTX affair.
Initially, Genesis Trading informed that FTX’s difficulties did not impact its activitiesbut very quickly, she qualified her remarks by revealing that 175 million dollars were blocked on the exchange.
Then on November 16, the company acknowledged that market volatility ultimately had an impact on his business. Although OTC trading remains operational, Genesis has chosen to temporarily suspend its lending services in the face of current market tensions:
We recognize how challenging this past week has been due to the impact of the FTX news. At Genesis we are entirely focused on doing everything we can to serve our clients and navigate this difficult market environment.
— Genesis (@GenesisTrading) November 16, 2022
In a statement to our colleagues at the Wall Street Journal, a spokesperson for Genesis, however, held to relativize the risk of bankruptcyinsisting that it was not yet on the agenda:
“We do not intend to file for bankruptcy any time soon. Our goal is to resolve the current situation in a consensual manner without the need for a bankruptcy filing. Genesis continues to have constructive conversations with creditors. »
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Binance will not provide support
It is difficult to get a precise idea about the situation of Genesis Trading. Indeed, while the company minimized the situation from the startthe following communications did indeed showed difficulties. If there is no question of questioning the word of the company, remember that FTX also sought, at first, to reassure on its situation.
The fact is that today Genesis Trading seeks to raise funds. If the primary goal was $1 billion, it would appear those ambitions would have been whittled down to $500 million, as sources familiar with the matter told The Block.
Regarding this operation, Binance did not wish to take part in any round table to refinance Genesis, despite the recent announcement of its relief fund intended for players in the ecosystem in difficulty. Thus, the exchange would have argued that such an investment could have led to conflicts of interest in the futurethus wishing to stay away.
The next days will therefore be decisive for this institutional actor that is Genesis Trading, if he wants to avoid joining the list of collateral damage of the FTX affair.
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Sources: Bloomberg, The Wall Street Journal, The Block
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