According to the new Bloomberg report, Genesis, a crypto lending platform, has announced it needs to raise $1B in funding to remain intact after FTX’s downfall; however, Binance backed off its investment today. Rumors of insolvency circulate on Twitter.
Genesis founded by Barry Silbert in 2015 was once valued to be about $10 billion last year, now it is $1B short to save itself from going insolvent. The constant crypto market crash and decrease in crypto tokens’ values led to the firm ultimately being at mercy of external investment. But now that Binance has turned away from investing in Genesis, the team is in search of a new entity to save them.
When FTX went down, many had speculated that the remaining connected subsidiaries and investment firms would also see a domino effect. Genesis is one of them, which was provided with $1B funds by Alameda Research, a hedge fund by Sam Bankman-Fried tied to FTX, in FTT tokens 3 months ago. The lending platform also had $175 million worth of assets stored in FTX; after all, it was one of the leading exchanges in the world led by SBF.
So, when the market saw that FTX was nothing but a Ponzi Scheme initiated by the billionaire and its executives, Genesis saw a loss of its major stored funds along with the investment.
Although the team hasn’t fully declared it insolvent, there’s no doubt that the lending platform is doing well in the current bear market. After all, FTT tokens have lost value, so Genesis doesn’t really have strong backup funds to rely on and shows a possible dissolution if it fails to receive new funding.
As a result, rumors of it going bankrupt surrounded the crypto community. Genesis denied such allegations saying it is working with the creditors to solve the issue. Nonetheless, the lending firm is in danger of falling out anytime this week.
Genesis was one of the strongest lending platforms also known for being a creditor of Three Arrows Capital as it lent $1.2 billion, so when 3AC went down, the platform faced a crisis, Digital Currency Group (DCG) its parent company, also Grayscale, immediately sent $140 million to recover.
So, if Genesis does go bankrupt there’s a high possibility that DCG will need to liquidate BTC Trust funds held by Grayscale to save it. These might be speculations but seeing the domino effect the platform is facing after the FTX collapse, DCG should be expecting a huge crisis coming its way.
In response to this, the company has remained silent and only shared that they need $1B in funding to save themselves from going bankrupt.