Another Giant Cryptocurrency Company Might Collapse

( Bloomberg reported this week that the cryptocurrency exchange Genesis Global Trading has been facing a liquidity crunch after users, spooked by the collapse of FTX, began rapidly withdrawing their assets.

Unnamed sources told Bloomberg that Genesis executives had spent several days asking investors for $1 billion in fresh capital that has so far not materialized.

However, a spokesperson for Genesis told Bloomberg that the exchange has no imminent plans to file for bankruptcy.

The spokesperson told the outlet that the company’s goal is to “resolve the current situation without the need for any bankruptcy filing.”

Executives from Genesis are reportedly in talks to receive an investment from Binance. However, no deal has yet been reached, Bloomberg reported.

Genesis Global Trading is owned by Digital Currency Group, which also holds investments in the Coinbase exchange platform as well as several cryptocurrency companies.

Last week, Genesis ceased withdrawals and new loan originations and has since remained relatively silent.

On November 16, the company said on social media that it remains “entirely focused on doing everything we can to serve our clients and navigate this difficult environment.” Genesis acknowledged that the collapse of FTX has “created unprecedented market turmoil” that has resulted in “abnormal withdrawal requests” that exceed the company’s “current liquidity.”

The previous week, it was reported that FTX founder Sam Bankman-Fried secretly transferred $10 billion in customer funds from FTX to his trading company Almeda Research, but a large portion of that money has since disappeared.

FTX filed for bankruptcy on November 11 and announced that the 30-year-old CEO Bankman-Fried was resigning after traders rushed to withdraw $6 billion from the platform in just 72 hours after rival exchange Binance walked away from a proposed rescue deal.

Last Tuesday, it was reported that Bankman-Fried and FTX co-founder Gary Wang were detained “under supervision” by Bahamian authorities as they are being investigated by the country’s financial crimes unit.