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As post-FTX fundraising efforts stall, Genesis Trading issues a bankruptcy warning.
The crypto giant may be the latest victim of "crypto contagion" after suspending lending services earlier this month.
Bloomberg reports that crypto industry mainstay Genesis Trading may be facing bankruptcy after its lending arm suspended services last week, and the company spent the weekend unsuccessfully trying to raise funds.
Founded in 2013, Genesis is one of the most prominent players in the Bitcoin trading industry and claims to have launched the first over-the-counter trading desk for Bitcoin that same year.
The company was looking for a $1 billion bailout last week after experiencing "abnormal withdrawal requests" following FTX's catastrophic failure.
The bankruptcy filing by FTX on November 10 caused widespread crashes and warnings in the cryptocurrency market. After five days, Gemini informed Gemini Earn customers that withdrawal requests would be delayed.
The Genesis Dollar (GUS) market lending rate increased by 75% after withdrawals were temporarily halted, likely due to a selloff and potential moves to short the asset.
After halting withdrawals on November 16, Gemini made its last public statement on Twitter, raising fears of a "crypto contagion."
In response to Bloomberg's report, Gemini assured the news organization that a bankruptcy filing is not "imminent."
Show Tweet from <blockquote class="twitter-tweet"><p lang="en" dir="ltr">1/6 We are aware that Genesis Global Capital, LLC (Genesis) — the lending partner of the Earn program — has paused withdrawals and will not be able to meet customer redemptions within the service-level agreement (SLA) of 5 business days. <a href="https://t.co/9e48pF3Ymn">https://t.co/9e48pF3Ymn</a></p>— Gemini (@Gemini) <a href="https://twitter.com/Gemini/status/1592873279232278532?ref_src=twsrc%5Etfw">November 16, 2022</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
Rather than filing for bankruptcy, the company hopes to reach a mutually agreeable resolution to the current situation, according to an email sent to Bloomberg. "Genesis is having productive talks with its creditors," the company said.
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