Cryptocurrency lending company Genesis Global Capital and other cryptocurrency firms are under investigation by US securities regulators, according to reports last Friday.
Joseph Borg, a director of the Alabama Securities Commission, confirmed that his state and several other states are engaged in inquiries regarding alleged Genesis relationships with retail investors, including whether Genesis and other cryptocurrency companies have violated securities laws, Barrons reported. It remains unclear what other companies are being investigated.
Borg noted that the investigation is focused on whether Genesis and other cryptocurrency firms influenced investors over cryptocurrency-related securities without proper registration.
The investigation is another chapter in the Genesis saga after the company revealed $175 million in funds stuck in an FTX trading account. On November 16, Genesis announced that it had temporarily suspended withdrawals, citing the unprecedented market turmoil following the collapse of FTX on November 11.
The company is reportedly having difficulties raising funds for its lending unit. However, Genesis has refuted speculation about imminent bankruptcy due to a $1 billion deficit.
As the company told Queen Telegraph on November 22, it does not plan to file bankruptcy immediately and continues to negotiate with creditors in a constructive manner, saying: We have no plans to file imminent bankruptcy. Our aim 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 appointed restructuring advisors to explore all possible options that include, but is not limited to, possible bankruptcy, Coin Telegraph reported on November 23, 2022. Moelis & Company, an investment bank, was hired by the company to explore options, while people confirmed Insiders say that no financial decisions have been made and that the company may avoid bankruptcy.
