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HomeMarketGenesis Seeks Funds as FTX Fallout Disrupts Crypto Market

Genesis Seeks Funds as FTX Fallout Disrupts Crypto Market

Genesis last week suspended redemptions and new loan originations in its lending business.

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Tremors continue to run through the cryptocurrency sector, amid concern over which companies are in financial distress following the collapse of crypto exchange FTX.

Lender
Genesis
is under the spotlight, after it was reported to have been rebuffed in its attempts to raise funds following a flood of withdrawals. 

Genesis and its parent company Digital Currency Group play a strategic role in the cryptocurrency sector. Genesis’s lending arm is one of the largest in crypto but it has been hit by customer failures and withdrawals. It had $2.8 billion in active loans outstanding at the end of September, down from $11.1 billion in that quarter a year earlier. 

Genesis has approached crypto exchange Binance and private-equity company
Apollo Global
(ticker: APO) for investment and to bid for its loan book, The Wall Street Journal reported on Monday, citing people familiar with the matter. Binance rejected the approach, according to the Journal. 

A spokesman for Genesis told the Journal it had no plans to file for bankruptcy imminently and continues to have constructive conversations with its creditors. Genesis didn’t reply to a request for comment from Barron’s early on Tuesday. 

Genesis last week suspended redemptions and new loan originations in its lending business, although it said its spot and derivatives trading and custody arms remained fully operational. 

The Journal has reported that Genesis initially sought an emergency loan of $1 billion. Cryptocurrency media outlet The Block reported Tuesday the lender had lowered its fundraising goal to $500 million. 

The Digital Currency Group is the owner of the Grayscale Bitcoin Trust (GBTC)—the largest Bitcoin fund in the world—and has invested in many other crypto projects. On Monday, shares of GBTC were close to a 50% discount on the value of its underlying holdings. 

Other companies with links to Genesis are seeking to reassure the market. Crypto exchange Gemini said early on Tuesday that it is continuing to work with Genesis to enable redemptions for users of its Earn product, for which Genesis is a lending partner. 

“This remains our highest priority and we understand Genesis and DCG remain committed to exploring every possible option to fulfill their obligations to Earn users,” Gemini said on Twitter. 

Write to Adam Clark at adam.clark@barrons.com

Credit: marketwatch.com

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