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Prominent crypto lending firm Genesis Global Capital is struggling following the bankruptcy filing of FTX. Now it is reported that several US securities regulators are seeking to investigate Genesis. The investigation is also said to expand over other crypto firms.
Alabama Securities Commission director, Joseph Borg, said that several states would be coming together to participate in the probing. The objective of the inquiry will be to identify if Genesis has the connections to retail investors. Moreover, alleged violation of securities laws by the crypto lending firm along with other crypto firms will also be the matter for agencies to look upon.
However, which companies will be a part of this investigation remains unclear.
The investigation, according to Borg, came in the wake of efforts to find out whether the said crypto companies anyhow influenced the investors. To check if they did so without having the specific registration.
FTX Initiated the Domino’s Fall
FTX filed for bankruptcy under the Chapter 11 Bankruptcy code. Ever since the Bahamian crypto exchange filed for bankruptcy, a lot of companies were reportedly affected and many of them were not even reported.
Although Genesis was in the list of companies clearly visible to get affected by the FTX implosion. Funds worth about 175 million USD belonging to the crypto lending platform had been trapped in its account over the crypto exchange.
Genesis went on to announce a temporary halt on its withdrawal operations during mid-November. The reason was cited as the market turmoil took place after the crypto exchange’s fall.
Withdrawal Led to Bankruptcy Rumors
Earlier Genesis was reported to find it difficult to gather funds. Given the need of staggering 1 billion USD, speculations soared all around that the firm could go through with bankruptcy filing. However, the firm denied the rumors of bankruptcy.
Genesis said the company has no plans for an imminent bankruptcy filing. The company has a goal to resolve the situation with mutual consent in any way except for bankruptcy. The company is constantly in conversations with several creditors around the space.
Moreover, the company has opted to go forward with hiring restructuring advisors who can help to explore the possible options. The option includes potential bankruptcy filing but not limited to it though.
FTX collapse brought Genesis into the mainstream discussion. Along with the firm, other companies under the umbrella of its parent company Digital Currency Group also affected. One such entity was the biggest bitcoin fund Grayscale Bitcoin Trust (GBTC) Fund.
The rumors citing Genesis bankruptcy filing end up impacting Grayscale stock prices considering it might help the former by selling off its BTC. However, the bitcoin fund went on to deny the claims.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
