Genesis, a well-known cryptocurrency lender ranked among the top lenders worldwide, is reportedly being scrutinized by regulators in the state of Alabama and other US states.
A thorough investigation is being conducted by the state securities department into issues related to the “interconnectedness of crypto firms.”
Genesis Looks to Raise $500 Million
The Alabama Securities Commission is reportedly investigating the situation to determine whether the crypto business violated securities laws by failing to submit the required registrations. To close its funding deficiencies, Genesis is attempting to collect at least $500 million in capital.
Although Genesis doesn’t directly support individual investors, it supports the products provided by crypto firms like Circle Internet Financial, the main administrator of the two major stablecoins, Gemini and USD Coin. Customers who deposit bitcoins on the platforms receive yield from these products.
Since the second week of November, Genesis Global Capital and its loan business have drawn a lot of attention. This is because new loan applications and withdrawals have been halted. The business reportedly just recruited a restructuring advisor, according to another story. Genesis wants to investigate potential strategies for avoiding bankruptcy.
At the moment, Genesis has denied that it intends to declare bankruptcy. Last week, The Digital Currency Group stated that it owed Genesis $575 million.
Regulators Wary Of Financial Contagion
State regulators’ primary worry is the degree of interdependence among crypto businesses. This suggests that, in the wake of the FTX and Three Arrows Capital disaster, there may be a greater likelihood of many crypto businesses folding.
The violation of securities laws is also at the forefront. Genesis, dubbed “the Goldman Sachs of crypto,” has transacted over $115 billion in the previous calendar year. Additionally, it has loans totaling more than $130 billion, thus the collapse of the company nevertheless dealt a very substantial blow to the sector as a whole.
Additionally, the stress brought on by the demise of the cryptocurrency hedge fund Three Arrows Capital has been felt by the organization. Because of this, Genesis suffered a $1.2 billion loss with 3AC.
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