Securities regulators in the U.S. are probing Genesis Global Capital and other crypto firms amid FTX’s abrupt and dramatic collapse.
Joseph Borg, director of the Alabama Securities Commission, revealed that the state of Alabama and several other states are participating in inquiries regarding Genesis’ alleged ties to retail investors. The regulators are investigating if Genesis and other crypto firms might have violated securities laws.
Borg said the investigation focuses on whether Genesis and other crypto companies influenced investors on crypto-related securities without obtaining the proper registration. This probe comes after the company revealed that around $175 million worth of funds are stuck in the FTX trading account. Genesis temporarily suspended withdrawals because of unprecedented market turmoil following Sam Bankman-Fried’s FTX collapse on November 11.
The lending firm is also facing difficulties raising money. But it refuted claims of an imminent bankruptcy due to a $1 billion shortfall. Genesis Global said it has no plans to file bankruptcy. It wants to resolve the current situation consensually without the need for any bankruptcy filing. The firm is having constructive conversations with creditors. Genesis hired restructuring advisers to look at all possible options, which should not be limited to potential bankruptcy. Insiders said no financial decisions have been made and that Genesis Global may still avoid bankruptcy.
