Tuesday saw a spike in selling pressure for bitcoin and the larger cryptocurrency market as investment bank Genesis, which specializes in cryptocurrencies, warned of a potential bankruptcy risk owing to its exposure to the newly bankrupt exchange FTX.
The value of the biggest cryptocurrency in the world fell by 3% to $15,787.4 by 18:47 ET (23:47 GMT) after falling as low as $15,504 earlier in the day, a new two-year low. Ethereum, the second-ranked cryptocurrency in the world, dropped 3% to $1,108.81, nearly doubling its monthly losses. Genesis Global Trading, one of the biggest institutional lenders in the market, has warned that it might face a potential bankruptcy if it cannot obtain new capital, becoming the latest victim of the crypto meltdown this year.
How close Is the Bankruptcy?
According to reports, the bank is looking for additional funding of up to $1 billion but has not yet located a source. But the company insisted that it had no immediate intentions to declare bankruptcy. According to reports, it has asked private equity company Apollo Global Management (NYSE: APO) and key exchange Binance for money.
The report’s news comes only one week after Genesis’ lending arm halted withdrawals after a bank run sparked by worries about its exposure to FTX. According to reports earlier this year, Genesis had several unpaid debts to Alameda Research, the cryptocurrency trading desk that was intimately associated with the FTX bankruptcy. Additionally, according to reports, it had lost money due to its exposure to the bankrupt hedge fund Three Arrows Capital early this year.
As the fallout from FTX’s failure began to spread, fellow cryptocurrency lender BlockFi filed for bankruptcy earlier this month. At the same time, several other smaller firms ceased withdrawals or stopped offering some lending and staking services. Total crypto valuation fell below $800 billion amid a sharply deteriorating attitude toward the industry, with numerous cryptocurrencies suffering prolonged losses. Dogecoin, a joke coin, lost 2.1%, while Binance Coin dropped 3.4%.