Several companies in the crypto industry closed their doors in 2022. A few of them seemed to disappear overnight. But Genesis’ creditors are trying to save the crypto brokerage from going bankrupt by making desperate calls.
Bloomberg says that the creditors of the troubled company have hired restructuring lawyers and are looking for ways to avoid what happened to the crypto exchange FTX, which quickly went bankrupt. Creditor groups are getting help from the law firms Proskauer Rose and Kirkland & Ellis.
“Our goal is to fix the current situation in the lending business without having to file for bankruptcy,” a Genesis spokesperson was quoted as saying.
After FTX went bankrupt, the US digital asset broker Genesis Trading stopped letting customers get their money back from their crypto loans. Later, it was found that its derivatives business had locked up almost $175 million in an FTX trading account.
Genesis’ interim CEO, Derar Islim, recently told clients that the company was talking with potential investors and some of its biggest creditors and borrowers. This included Gemini, which was run by Winklevoss, and Digital Currency Group, which was its parent company (DCG). In a letter seen by Reuters, Islim said that the main goal is “to agree on a solution that strengthens the overall liquidity of our lending business and meets the needs of our clients.”
Genesis tried for several days to get $1 billion from potential investors, but it didn’t work out. It was also said to be in talks with Binance about getting more money. But the crypto exchange turned down the offer because some of its business could lead to a conflict of interest in the future.
Because of what happened with FTX, several US regulatory agencies are now looking into not only the collapsed cryptocurrency exchange but also other centralized gatekeepers. Barron’s says that the Alabama Securities Commission and other states are looking into whether or not Genesis Global Capital broke securities laws.
There have also never been more calls for clear rules. Christine Lagarde, president of the European Central Bank (ECB), stuck to her position and said that the EU “absolutely needs” to keep an eye on this type of asset (EU). In the US, people are still talking about the FTX crash, and a Senate hearing is set for December 1.
The hearing on Thursday is one of at least two that will focus on the fall of the Sam Bankman-Fried exchange. It is called “Why Congress Needs to Act: Lessons Learned from the FTX Collapse.
“Maxine Waters, who is in charge of the House Financial Services Committee, said that a hearing will be held next month to look into what happened to FTX and what it means for the digital asset ecosystem as a whole.