February 3, 2023

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US regulators to investigate Genesis and other crypto companies

US regulators to investigate Genesis and other crypto companies

Cryptocurrency lending company Genesis Global Capital and other crypto firms are under investigation by US securities regulators, according to reports November 25.

Alabama Securities Commission Director Joseph Borg confirmed his state and several others are engaged in inquiries regarding alleged Genesis ties to retail investors, including whether Genesis and other crypto firms violated securities laws, Barrons mentioned. It remains unclear what other companies are being investigated.

Borg noted that the investigation is focused on whether Genesis and other crypto firms influenced investors over cryptocurrency-related securities without proper registration.

The investigation is another chapter in the Genesis saga since the company revealed it About $175 million The value of funds outstanding in an FTX trading account. On November 16, Genesis announced that it had done so temporarily suspended withdrawals, Citing “unprecedented market turmoil” after the collapse of FTX on November 11th.

The company is reportedly having difficulties raising funds for its lending unit. However, the Genesis Refuting speculations of its “imminent” bankruptcy Because of a deficit of one billion dollars. On November 22, the company told Cointelegraph:

We have no plans to file imminent bankruptcy. Our goal is to resolve the current situation by mutual consent without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors.”

Genesis has hired consultants for the restructuring to explore all possible options, which includes but is not limited to a possible bankruptcy, as reported by Cointelegraph on November 23. Moelis & Company, an investment bank, was hired by the company to explore options, while people familiar with the situation confirmed that no financial decisions had been made and that the company might avoid bankruptcy.

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Genesis has been in the spotlight due to fears of contagion in the industry as a result of the bankruptcy of FTX along with its sister company Grayscale Investments and parent company Digital Currency Group.

A November 18 tweet from Grayscale reassured investors that all digital assets behind Grayscale’s digital asset products are stored under Coinbase’s custody, citing a letter from Coinbase CFO Alesia Haas and Coinbase Custody CEO Aaron Schnark.

Cointelegraph reached out to Genesis Global Capital, but did not receive a response prior to publication.

Update (November 26, 1:00am UTC): This article has been updated to clarify that Aaron Schnarsh is the CEO of Coinbase Custody, not Coinbase.