US Regulators Are Investigating Genesis and Other Crypto Companies: Report
Several regulators, including the Alabama Securities Commission, are investigating whether crypto lending company Genesis violated securities laws, Barron’s reported.
According to the report, Alabama Securities Commission Director Joseph Borg and other state regulators are focused on whether Genesis is persuading state residents to invest in crypto securities without proper registration. Borg did not name the other companies investigated.
The investigation is another chapter in the Genesis saga since the company revealed it had around $175 million worth of funds stuck in an FTX trading account. On Nov. 16, Genesis announced it had temporarily suspended withdrawals, citing “unprecedented market turmoil” following FTX’s collapse on Nov. 11.
The firm is reportedly facing difficulties raising money for its lending unit. However, Genesis has refuted speculation of its “imminent” bankruptcy due to a $1 billion shortfall.
The Genesis and Alababa Securities Commission did not respond to a request for comment on the matter.
Earlier this week, Genesis confirmed it had hired an investment bank to explore its options, including bankruptcy, as it has struggled to recover from its exposure to collapsed crypto exchange FTX and before that to failed crypto hedge fund Three Arrows Capital.
Genesis had spent much of November scrambling to raise fresh capital or reach a deal with creditors. The company’s institutional lending unit last week was forced to suspend redemptions and new loan originations.
Genesis also previously disclosed that its derivatives unit had about $175 million in locked funds in its FTX trading account. As a result, parent company Digital Currency Group (DCG) opted to strengthen Genesis’ balance sheet with an equity infusion of $140 million.
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