The twists and turns related to the FTX trading platform are not ready to make waves yet. American broker Genesis Trading is desperate for $500 million to survive… and not drag the entire ecosystem down with it.
A serious bankruptcy for the ecosystem
While the crypto industry has experienced a succession of crashes, bankruptcies and defaults by other players more or less dependent on the FTX platform in recent days, the giant Genesis has been racing against the clock for more than 72 hours since then to get funding.
What is at stake is the pure and simple survival of a company that seemed to be firmly established just a few days ago. But that was before FTX proved in record time that companies that appear to be the strongest and most loyal in the industry can crumble in a matter of days.
So, in the apocalyptic mood of the crypto market, Bloomberg reported Genesis’s statement as follows: “Genesis fails to convince one or more buyers and braces for inevitable bankruptcy.”
If Genesis went out of business, it would be a real tidal wave for the ecosystem. For example, if Coinhouse were to suspend withdrawals from its crypto passbooks, it would be because they are partially controlled by Genesis.
Genesis Trading is little known in France and has been part of the crypto ecosystem for years. His disappearance would crown a catastrophic year 2022 for cryptocurrencies, arguably the worst since the birth of Bitcoin (BTC) in 2009.
However, Genesis was quoted by Bloomberg as saying that the company has no immediate plans to file for bankruptcy. :
“We do not plan 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 engage in constructive discussions with creditors. »
The FTX earthquake
Founded in 2013, Genesis Trading is considered a premium cryptocurrency exchange. It was one of the first such companies to be licensed and regulated in the United States, allowing bitcoin trading since 2012. Genesis Trading also offers cryptocurrency custody and lending.
It was Genesis Trading, a company specializing in over-the-counter (OTC) cryptocurrency trading, that itself sounded the alarm about a possible bankruptcy. In fact, the company is currently seeking new funding due to the cash crisis caused by the FTX incident.
Initially, Genesis Trading informed FTX that the difficulties had not affected its business, but the company quickly proved its point by revealing that $175 million had been frozen by the exchange.
Then, on Nov. 16, the company acknowledged that market volatility had affected its business. While over-the-counter trading remains operational, Genesis has elected to temporarily suspend its lending services in light of the current market stress.
In fact, we know that Genesis lent crypto funds to Alameda Research and accepted FTX’s native FTT token as collateral. However, the loan amount was not disclosed… but the FTT lost 95% of its value in two weeks.
If the broker is in this liquidity crisis today, it is primarily due to the aftershocks of the FTX earthquake, not direct dependence on a disabled platform.
You should know that the cryptocurrency ecosystem is still small compared to traditional markets. So when the second largest trading platform in the world disappears, the whole market suffers.
While there was still a glimmer of hope yesterday that Binance would acquire Genesis, the latter eventually bounced back. The bid was $500 million in the evening, which was rejected by the crypto platform.
In fact, Binance said the deal was not possible due to a potential conflict of interest with Genesis’ business model.