Cryptocurrency brokerage Genesis has reportedly said it may file for bankruptcy if it doesn’t raise at least $1 billion in new funding.
The firm has been struggling to raise cash for its lending unit and has so far failed to raise what it needs, Bloomberg reported Tuesday (Nov. 22), citing unnamed sources.
This race for new capital follows the suspension of withdrawals by Genesis’ lending unit after the collapse of crypto exchange FTX. Genesis had $175 million locked in an FTX account and subsequently ran into liquidity problems, according to the report.
“We have no plans to file bankruptcy imminently,” a representative for Genesis said, per the report. “Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors.”
Genesis did not immediately respond to PYMNTS’ request for comment.
Because Genesis is a counterparty to many other firms in the cryptocurrency space, it is seen as a bellwether of the industry’s ability to withstand the fall of FTX and other issues facing crypto, according to the report.
As PYMNTS reported Tuesday, Genesis announced Nov. 10 that it was pausing withdrawals from its lending arm as a result of “unprecedented market turmoil.”
“Our #1 priority is to serve our clients and preserve their assets,” the firm wrote in a Nov. 16 tweet. “Therefore, 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 news around the collapse of FTX continues to stoke fears over which companies might now be in distress.
More than 130 FTX Group companies have filed for bankruptcy, including FTX.com, FTX US and Alameda Research.
Alameda Research and FTX US reportedly each have liabilities of between $10 billion and $50 billion, as well as assets within that range.
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