Cryptocurrency lender Genesis is reportedly preparing to declare bankruptcy as a number of companies deal with the fallout from flagging cryptocurrency prices and FTX’s collapse.
Genesis, the lending unit of Digital Currency Group, is facing a liquidity crunch and has been laying the groundwork for a bankruptcy filing this week, the Wall Street Journal reported. A Chapter 11 filing had been anticipated for months as the company faced serious headwinds.
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Genesis laid off 30% of its employees earlier in January, with the cuts coming across the board and not just in one department. The company was left with a staff of 145 after the job cuts. Genesis has been in talks with investment bank Moelis & Company to mull its options, including bankruptcy.
At the time of the layoffs, a Genesis spokeswoman said the cryptocurrency lender is consulting with advisers “to preserve client assets and move the business forward.”
Several other cryptocurrency firms have suffered over the past few months. FTX dramatically imploded in November and dragged several companies down with it. The price of bitcoin also plunged following the crypto giant’s collapse.
Bitcoin fell from above $21,000 and was treading water at below $17,000 for several weeks following FTX’s downfall.
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Genesis faced big losses from the loans it supplied to Alameda Research, a hedge fund associated with FTX that is at the center of the controversy surrounding the company and FTX’s disgraced founder, Sam Bankman-Fried.
Crypto lender BlockFi announced late last month that it had filed for bankruptcy. BlockFi’s struggles were intertwined with those of FTX, as the company provided BlockFi with a $400 million credit line and the option to buy the company.