Second Major Cryptocurrency Exchange Could Be Poised To Go Bankrupt | The Daily Wire

Second Major Cryptocurrency Exchange Could Be Poised To Go Bankrupt | The Daily Wire

— News — Genesis Global Trading could be poised for bankruptcy less than two weeks after fellow cryptocurrency exchange FTX suddenly imploded. According to a Monday report from Bloomberg, Genesis has been facing a liquidity crunch as users spooked by the collapse of FTX began rapidly withdrawing their assets. Unnamed sources told the outlet that executives at Genesis have spent the past several days asking investors for $1 billion in fresh capital, which has not yet materialized. “We have no plans to file bankruptcy imminently,” a spokesperson for Genesis told Bloomberg. “Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors.” FTX, which had been controlled by 30-year-old multibillionaire Sam Bankman-Fried, filed for bankruptcy after users discovered that trading firm Alameda Research, a company run by former Bankman-Fried love interest Caroline Ellison, had allegedly been using funds from FTX to make investments. Binance initially made an offer to bail out the company but withdrew the proposal, leading to the venture’s collapse and the resignation of Bankman-Fried. Leaders at Genesis have also been in talks to receive an investment from Binance, which is led by chief executive Changpeng Zhao. No such deal has yet been made, according to Bloomberg. Genesis is owned by Digital Currency Group, which also holds investments in popular exchange platform Coinbase and several dozen other cryptocurrency companies, according to a report from Axios. Genesis ceased withdrawals and new loan originations last week and has been relatively silent over the past several days. “At Genesis we are entirely focused on doing everything we can to serve our clients and navigate this difficult market environment,” the company said on social media last Wednesday. “FTX has created unprecedented market turmoil, resulting in abnormal withdrawal requests which have exceeded our current liquidity.” Lawmakers increased their skepticism of the cryptocurrency sector in response to the crises. A letter from four members of the Senate Banking Committee to multiple regulators expressed concern over SoFi Technologies, a company that operates as a bank holding company and owns a subsidiary cryptocurrency exchange. “Over the past year, several meltdowns in the crypto market have wiped out trillions in value, including another huge crash last week,” the lawmakers told SoFi CEO Anthony Noto, requesting information on the company’s compliance with banking standards. Another report from Bloomberg indicated that federal prosecutors in the Southern District of New York had been conducting a probe into FTX and other cryptocurrency companies with domestic and overseas branches over concerns about money laundering and terrorism financing. FTX is based in the Bahamas and incorporated in Antigua and Barbuda. John Ray III, the lawyer who represented plaintiffs after the collapse of Enron, said that the cryptocurrency empire run by Bankman-Fried was the worst failure he has ever witnessed. “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” Ray, who succeeded Bankman-Fried as chief executive to manage the bankruptcy, said in court documents. “From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”

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