The company becomes the new victim of this market segment after the collapse of FTX and the default of the Three Arrows fund
The blow caused by the collapse of the FTX crypto asset platform for this market segment has claimed a new victim. Crypto trading and lending firm Genesis Global Holdco and two of its subsidiaries, Genesis Global Capital and Genesis Asia Pacific, have filed for bankruptcy and are benefiting from the protections of Chapter 11 of the Code that regulates such processes in the US.
Thus, Genesis becomes the latest victim of the “crypto winter” plaguing the sector following the aforementioned case of FTX and the default of the Three Arrows fund. According to the company’s public records, its assets and liabilities range between $1,000 and $10,000 million (925 and 9,248 million euros), while it has more than 100,000 creditors.
As early as November 16, Genesis Global Trading temporarily suspended all withdrawals from its credit partner due to “unprecedented market turmoil that has resulted in withdrawal requests that are beyond our current liquidity.”
Genesis reports that it has more than $150 million (139 million euros) in cash, which should provide sufficient liquidity to support ongoing operations and facilitate a restructuring of the company.
The idea is that after filing for bankruptcy, the company will begin a restructuring process with the aim of achieving “a holistic solution for its lending business”. Specifically, the roadmap would include a sale operation or a capital raise, “which would allow the company to emerge under a new owner”. The proceeds would be used to pay creditors.
“In light of liquidity issues caused by recent extraordinary challenges in our industry, including the bankruptcy of Three Arrows Capital and the bankruptcy of FTX, judicial restructuring offers the most effective way to preserve assets and create the best possible outcome for all companies . Genesis stakeholders,” explained Derar Islim, interim CEO of Genesis.
The truth is that after a disastrous year for the industry, with sharp drops of about 70% for cryptos as popular as bitcoin or ethereum, these virtual currencies have managed to regain some of their value in an environment where the appetite for risks has resurfaced. on the market.
However, serious doubts remain about the future of an industry that still lacks its own regulations that provide greater transparency and certainty to investors. In Spain, the appearance of this new type of asset is one of the major concerns of the National Securities Market Commission (CNMV) or the Bank of Spain.
It is not a problem of the technologies that support them, such as blockchain, where both institutions see capacity and benefits in terms of efficiency, time savings and also costs.
They themselves see the risk in the cryptocurrencies. The president of the CNMV, Rodrigo Buenaventura, emphasized this week that “they are uninteresting and quite useless socially”. “I hope in a few years we will forget about them and talk about how we can apply DLT or Web 3 to real financial instruments, or widely accepted cryptocurrencies, not toy tokens,” he said.
The collapse of crypto assets in 2022 and the malpractices discovered in some of its actors have reactivated the urgent need to end through regulation the dangerous cocktail of volatility, speculation and even misunderstanding that has plagued this market since the genesis surrounds.
At the moment, the European Commission is expected to pioneer in 2023 the adoption of MiCA (Markets in Crypto Assets), the regulation that will try to bring order to the market, forcing this type of platform to comply with strict requirements to be able to perform prior authorized registration.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
