Towards the end of last week, Genesis Global Capital—the lending business of Genesis Trading—suspended redemptions. Its parent company, Digital Currency Group, clarified that the decision was made in response to the “extreme market dislocation” and “loss of industry confidence” caused by the implosion of FTX.
Right after, the company sought a $1 billion emergency loan. Earlier today, the crypto lender warned that that it would go bankrupt without funding support. According to a recent report from The Wall Street Journal, Genesis asked Binance for an investment. Per the media outlet’s unknown sources, Genesis also reached out to private equity giant Apollo Global Management for support.
The former, however, ended up turning down the request. Elaborating on why, the report noted,
“Binance decided not to invest, fearful that some of Genesis’s business could create a conflict of interest down the line, according to one of the people familiar with the matter.”
Worth recalling here is that Binance’s CEO Changpeng Zhao recently revealed that the exchange was setting up a recovery fund to aid projects during a liquidity crisis. Thus, Genesis approaching Binance to aid its sinking ship doesn’t essentially come as a surprise.
Genesis continues to have “constructive conversations” with creditors
Even though the largest crypto exchange turned down Genesis’ request, the lender doesn’t plan to file for bankruptcy anytime soon. Commenting on the current state of affairs, a spokesperson said,
“We have no plans to file bankruptcy imminently. Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors.”
Nonetheless, it should also be noted that the lender lent $2.4 billion to Three Arrows Capital. Notably, Genesis’ parent company—Digital Currency Group—has a $1.2 billion claim against the hedge fund.