Genesis investment request rejected by Binance

Key points:

• Late last week, Genesis Global Capital suspended redemptions.
• The company immediately applied for a $1 billion emergency loan thereafter.
• Earlier today, the cryptocurrency lender warned that it would go bankrupt without funding.
• Genesis approached Binance for investment. 
• Binance decided not to invest, fearful that some of Genesis’s business could create a conflict of interest down the line.
• The lender has no plans to file for bankruptcy anytime soon.

Late last week, Genesis Global Capital — the lending business of Genesis Trading — suspended redemptions. Parent company Digital Currency Group clarified that the decision was made in response to “extreme market dislocation” and “loss of confidence in the industry” caused by FTX’s implosion.

The company immediately applied for a $1 billion emergency loan thereafter. Earlier today, the cryptocurrency lender warned that it would go bankrupt without funding. According to a recent Wall Street Journal report, Genesis approached Binance for investment. Genesis has also sought support from private equity giant Apollo Global Management, according to unnamed sources at the media company.

However, the former rejected the request. In explaining why - the report states:

“Binance decided not to invest, fearful that some of Genesis’s business could create a conflict of interest down the line, according to one of the people familiar with the matter.” 

It’s worth remembering that Binance CEO Changpeng Zhao recently revealed that the exchange is establishing a recovery fund to support projects during the liquidity crisis. So it’s no surprise that Genesis turned to Binance to help its sinking ship.

Genesis continues 'constructive discussions' with creditors

Although the largest cryptocurrency exchange rejected Genesis' request, the lender has no plans to file for bankruptcy anytime soon. A spokesperson said on the current situation:

“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.”

That said, it should also be noted that lender Three Arrows Capital has lent $2.4 billion. Notably, Genesis’ parent company — Digital Currency Group — filed a $1.2 billion claim against the hedge fund.