Instability among investors has caused the FTX disaster to tumble coins hysterically. The value of the global cryptocurrency market, which was previously close to $1 trillion a few weeks ago, has decreased to around $800 billion as a result of sharp price corrections in various cryptocurrencies. Wealth worth billions of dollars has been lost! Can crypto investors withstand further shocks? Illiquidity continues to be one of the primary issues with crypto exchanges, and yet it washes off investors’ faith, causing a fast slide in the market.
As a result, bankruptcy seems to have become a pattern in the past few months among crypto exchanges. It appears that the bankruptcy issue will not be resolved anytime soon, and there are rumors that the cryptocurrency brokerage Genesis Trading may be about to receive
FTX declared bankruptcy on November 11, but panicked investors had already begun dumping the exchange’s native token FTT a few days before. When concerns regarding its sibling firm Alameda’s financial sheet surfaced concerning whose foundation was mostly built with their native token FTT rather than an independent asset like a fiat currency or other cryptocurrencies, FTX’s problems came to light. FTX filed for Chapter 11 in order to start a systematic process of reviewing and monetizing assets for the benefit of all worldwide stakeholders, notwithstanding Sam Bankman-assurances Fried’s that everything was good with FTX and the Group as a whole.
The worldwide crypto market cap is at $781.26 billion on CoinMarketCap, down by 1.77% as of this writing. The major cryptocurrencies, Bitcoin and Ethereum, are trading below $15,800 and $1,100, respectively, down by around 2% over the past day. FTX coins are now having trouble maintaining the $1 level. 29% has been lost by FTX over the past week, and over 94% has been lost monthly.
In the last few days, while Alameda’s financial sheet was under scrutiny and FTT tokens were falling in value, Genesis has been active in revising its relationship with FTX.
In a tweet from Genesis on November 9, “FTX is one of the exchanges with which Genesis trades. Our capacity to service our clients is unaffected by our exposure to FTX.” According to the brokerage, “we hedged and sold collateral on the same day in anticipation of the significant market volatility, leading in a total loss of almost $7 million across all counterparties, including Alameda.”
Genesis later reiterated that it had no continuing loan arrangement with FTX or Alameda.
The most recent tweet on FTX was sent by Genesis on November 16 and said, “To investigate every alternative, we have engaged the greatest consultants in the business. We will present a loan business strategy the following week. We are putting in a lot of effort to find the best answers for the loan industry, including finding fresh liquidity, among other things.”
On its Twitter threads, it said that “We are aware of how difficult this last week has been given the effect of the FTX news. At Genesis, our whole attention is on doing all in our power to help our clients and get through this challenging market climate.”
According to persons with knowledge of the situation, Bloomberg reported on Monday, November 22, that Genesis is having difficulty finding new funding for its lending division and is telling potential investors that, should those attempts fail, it may be forced to declare bankruptcy. According to the sources, Genesis has spent the last few days looking for at least $1 billion in new funding, including discussions about potential investment from cryptocurrency exchange Binance.
Bloomberg was informed by a Genesis spokesperson that “We don’t have any immediate intentions to file for bankruptcy, we said, adding that we want to find a mutually agreeable solution to the current problem. Genesis is still having fruitful discussions with its creditors.”
