Genesis Global Trading is in dire straits. The company's lending unit was forced to freeze customer withdrawals in the aftermath of the FTX collapse. Genesis is said to be on the verge of financial ruin.
According to reports, Genesis laid off 30 percent of its workforce this week, the latest sign of its financial ill health.
Genesis is central to the day-to- day operations of the industry. A total of $131 billion in loans and trades were issued by the company. Genesis borrows from individuals and institutions that own large quantities of coins in return for a cut of profits.
Genesis had a hot streak, but it ended in 2022. Since the collapse of Three Arrows Capital, the lender has been in trouble. The firm lost $175 million when FTX filed for bankruptcy on November 11.
DCG, the parent company of Genesis, had to bail out on two occasions. Genesis had to freeze withdrawals and begin to look for emergency funding because of the FTX situation. Genesis has not received a rescue package.
Fear of missing out on huge sums of money was spread by the frothiness of the market. The allegations of fraud at FTX have led to a suspicion of both the promises and accounting practices of largecryptocurrencies.
According to a recent paper, venture capital investment in cryptocurrencies is drying up. After a year in which $21 billion of capital flooded into the industry, appetite for investment is collapsing quickly. The volume of deals had fallen to a two-year low by the third quarter of 2022, as funding was down 34.3% year-on- year.
In Genesis, investors have been put off by a lack of clarity over the size of the cash injection necessary to plug the hole. The shortfall is massive and unknown, according to him.
Brad Harrison is the leader of the team that created Venus. He says that a Genesis bankruptcy would come as no surprise in the wake of the events of the past year. As for the specifics, we are all just guessing.
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