After the FTX crash, Genesis stopped processing client withdrawals.
Genesis has $2.3 billion in debt after the collapse of Three Arrows Capital.
Because of the widespread impact of FTX’s demise, several U.S. regulatory authorities are now looking into the crypto exchange and other centralized operators.
According to Barron’s, regulators in many states are now looking into Genesis Global Capital.
As per Alabama Securities Commission Director Joseph Borg, who spoke with Barron’s, “several other states” are involved in the investigation. The other territories were not specified by Borg.
Interlocking Connections
Barron’s reports that Genesis is being looked at as part of a larger inquiry into the interconnection of several cryptocurrency firms. And possible violations of state securities laws. If a major player like FTX were to fail, Borg said, “the interdependencies and interlocking connections in the crypto space” would be in danger.
After the FTX crash, Genesis stopped processing client withdrawals and new loan originations on November 16. The company cited “abnormal withdrawal requests.” Before suspending withdrawals, the company allegedly requested an emergency injection of $1 billion.
Gemini’s Earn accounts are managed via a relationship with Genesis. Thus when Genesis froze withdrawals, Gemini had to alert consumers of potential withdrawal delays. By the 21st of November, Genesis has already notified its investors that the company may go bankrupt unless it receives further funding.
Barry Silbert, CEO of Genesis’s parent firm Digital Currency Group, sent an upbeat letter to investors on Tuesday, insisting that the business had a bright future despite owing Genesis $575 million. Genesis has $2.3 billion in debt after the collapse of Three Arrows Capital (3AC) earlier this year, and now it faces further probes on top of that.