Recently, crypto lending platform, Genesis Global Capital paused withdrawals just after the climax of the FTX bankruptcy news. And now, reports from The Wall Street Journal have now revealed that the company had requested for funding of $1 billion in loan via a secret fundraising document, before they announced their withdrawal suspension.
This could mean that Genesis Global Capital will now join the already high-profile and long list of businesses and companies that have suffered from the bad domino effect caused by the collapse of FTX. There are also confirmations of Genesis being owed large debts by various companies including the now bankrupt Alameda Research and Three Arrows Capital, and it could all be summing up to another bankrupt crypto company soon.
Genesis Global Capital Is on the Road to Bankruptcy
According to the fundraising document, Genesis is in search of investors or creditors to offset a deficit in their balance sheet due to some illiquid assets they possess. But although a Genesis executive has told The Wall Street Journal there is positive interest and that they can surmount their liquidity, it seems like that wouldn’t be the only problem they’ll face.
Genesis currently has outstanding loans with two companies who are now in financial crisis, one of them being SBF’s Alameda Research. And the loan was collateralized with FTT tokens which have now crashed in price by over 90% since the FTX collapse. This means that the debt owed will now will now be a bad debt to written off, which is a great loss.
This second company is bankrupt Three Arrows Capital hedge fund. They were owing Genesis $3.2 billion before their financial downfall, and with such large amount written off as bad debt, Genesis Global Capital could be in a quagmire soon.
Gemini Users Are Slowly Pulling Out Due to Fear
Following the collapse of FTX, Gemini exchange declared on Twitter that their withdrawals were still on, probably in a bid to reassure their customers or to drag some share of FTX’s own customer base. But that move has totally backfired as users and investors have become afraid and malignant because of the announcement.
CryptoQuant founder, Ki Young Ju, recently revealed that $ETH withdrawals reached an all-time high on November 18, 2022 with a volume of up to $570 million withdrawn. This could spell trouble for Gemini as the domino quake of FTX’s collapse continues to rock the crypto world.
