Bitcoin got hit by huge pressure this Tuesday. The reason is due to the investment bank, Genesis, signaled a potential risk of bankruptcy due to its exposure to the exchange FTX.
The most valuable cryptocurrency was up 2.4% to US$ 15.861, reversing a two-year low of US$ 15.487. Meanwhile, the market’s second-largest cryptocurrency, Ethereum, gained 2.87% to US$1.107,33, bringing its total monthly losses to 30%.
Genesis warned of a possible collapse if the company failed to acquire new funds. The bank is looking for new investments worth up to $1 billion but has yet to find one.
However, the company stated that it had no plans to declare bankruptcy for the time being. The company approached the exchange Binance and the private equity firm Apollo Global Management for the required funds.
“We have no plans to file bankruptcy imminently,” a spokesperson told Al Jazeera. “Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors.”
FTX Debacle Affecting Genesis
Genesis is a subsidiary of DCG, a $10 billion cryptocurrency corporation. The group’s cryptocurrency exchange company has $175 million stranded on the exchange FTX, which filed for bankruptcy protection on November 11.
The potential bankruptcy report emerges only a week after Genesis’s executive board suspended trading because of concerns over its exposure to the FTX.
Genesis has multiple investments attached to Alameda Research, a firm that was closely tied to FTX’s demise. The whole FTX debacle occurred when Sam Bankman-Fried attempted to use FTX’s customer funds in order to cover Alameda’s losses in the market.
In addition, the lender also lost money as a result of his investment in the hedge fund Three Arrows Capital, which went bankrupt earlier this year.
As the FTX collapse continued, rival competitor, BlockFi, filed for bankruptcy at the beginning of this month. Also, multiple other smaller exchanges ceased or discontinued certain staking and investing services.