Genesis Trading is facing a liquidity crisis following the FTX affair, which has put it at risk of bankruptcy. As the company seeks new funding, Binance has reportedly refused to take part in a potential funding round.
Genesis Trading is seeking to raise funds to avoid bankruptcy
According to Bloomberg, over-the-counter (OTC) cryptocurrency trading specialist Genesis Trading has raised the alarm about a potential bankruptcy. The company is currently looking for new funding due to a liquidity shortage caused by the FTX case.
Initially, Genesis Trading said that FTX’s difficulties were not impacting its business, but it quickly qualified its words by revealing that $175 million was tied up on the exchange.
Then on 16 November, the company acknowledged that market volatility had finally had an impact on its 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 the Wall Street Journal, a Genesis spokesperson put the risk of bankruptcy into perspective, insisting that it was not yet on the agenda:
“We are not in a position to take any further action.
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. “
Binance will not support
It is difficult to get a clear picture of the situation at Genesis Trading. Indeed, while the company downplayed the situation from the outset, subsequent communications have indeed indicated difficulties. While there is no question of questioning the company’s word, it should be remembered that FTX was initially seeking to reassure people about its situation.
The fact is that Genesis Trading is now seeking to raise funds. While the initial target was $1 billion, it would appear that these ambitions have been reduced to $500 million, as sources close to the matter reported to The Block.
Regarding this operation, Binance did not want to take part in any round of financing to refinance Genesis, despite the recent announcement of its rescue fund for ecosystem players in difficulty. The exchange argued that such an investment could lead to conflicts of interest in the future, and therefore wanted to stay away.
The next few days will be decisive for Genesis Trading, if it wants to avoid joining the list of collateral damage from the FTX affair.
