Genesis is gradually falling under the FTX collapse's effects after filing for Chapter 11 bankruptcy protection in New York. Companies within the crypto industry have been on a downfall spree since the FTX scandal, and Genesis is part of the victims.
Genesis Global Capital, the lending arm of crypto business Genesis, filed for bankruptcy after it failed to raise the capital that could have prevented the bankruptcy. In November 2022, Genesis told Al Jazeera that they had no plans of filing for bankruptcy. This was after many people expected the lending firm to collapse immediately with FTX.
According to the spokesperson of Genesis, they said, "we have no plans to file bankruptcy imminently. Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors."
However, things didn't work the way Genesis had expected, as they filed for bankruptcy on the 19th of January, 2023.
What the Crypto Community is Saying
The crypto community is in disbelief of what is happening within the industry — The bankruptcy spree has continued for a long time. Many community members are slowly losing trust in crypto firms as they do not know the next company to collapse.
Some members of the crypto market community pinpointed their opinion to US-based companies. Apparently, any US-based crypto firm will forever be suspicious.
Others have an entirely different perspective of what is happening. A Twitter user named Coin Bureau said the ongoing bankruptcies in the crypto industry are only making financial lawyers rich.
The Twitter user said, "Genesis just filed for chapter 11. Bankruptcy lawyers making bank on crypto bankruptcies."
Another user supported this claim with a diagram/chart that showed how the Genesis bankruptcy would reveal crypto’s leverage cycle.
Genesis' interim CEO Derar Islim has released a new statement since the news broke out, saying, "While we have made significant progress refining our business plans to remedy liquidity issues caused by the recent extraordinary challenges in our industry, including the default of Three Arrows Capital and the bankruptcy of FTX, an in-court restructuring presents the most effective avenue through which to preserve assets and create the best possible outcome for all Genesis stakeholders."