The lending unit of Genesis, Genesis Global Capital, filed for bankruptcy in the United States, seeking legal protection. The company owns creditors close to $3.4 billion. The company has been affected by the recent fall of the FTX cryptocurrency exchange. Now, the company has blocked withdrawals and users will have to wait in order to withdraw their funds.
Genesis Global Capital Files for U.S. Bankruptcy
The adverse effects of the collapse of the cryptocurrency FTX can yet be seen in the crypto market. This time, Genesis Global Capital, one of the leading lenders in the crypto industry, filed for U.S. bankruptcy. Users are now blocked from withdrawing their funds from the platform, which shows that the impact of the FTX implosion continues until today.
Currency and crypto strategist Ivan Kachovski, commented about this situation:
“It remains to be seen if the chain effect would go on. However, given that the funds have already been frozen for over two months and no other large crypto company reported an associated weakness, it’s likely that the contagion would be limited.”
As per the filing, the liabilities reported by Genesis could be as high as $10 billion. Additionally, there are more than 100,000 creditors in the filing. Therefore, there will be multiple requests from users that would like to withdraw their funds and cannot do so.
Despite the recent bankruptcy filing by Genesis Global Capital, the crypto market has moved higher by 2.3%. Bitcoin (BTC) continues to lead the market with a price increase of 2.3% in the last 24 hours, allowing it to hit $21,340 per coin and a market capitalization of $412 billion.
Ethereum (ETH), instead, moved higher by 3.8% and it is being traded close to $1,600. In the last 7 days, Bitcoin has registered close to 13.5% gains and Ethereum 12.5%.
It is worth taking into consideration that multiple other companies have been close to falling after the collapse of FTX. The same happened earlier in 2022 with Terra (LUNA), when after imploding it created a contagion effect on many different projects and protocols.
With the current bear market that started in November 2021, virtual currencies fell and several projects have followed the same trend. For example, Bitcoin fell from $69,000 to below $16,000 a few months ago. This bear trend created a difficult situation for many companies and projects, and FTX was just one of the most affected ones.
Many analysts considered that the contagion effect could have reached other virtual currency exchanges, but situation seems to have stabilized after a difficult period for many companies.