by According to reports Nov. 25, cryptocurrency lending firm Genesis Global Capital and other crypto firms are under investigation by securities regulators in the United States.
Joseph Borg, director of the Alabama Securities Commission, confirmed that the state and several other states are participating in investigations into Genesis’ alleged ties to retail investors, including whether Genesis and other crypto firms may have violated securities laws, Barron’s reported. It is still unclear which other companies are being investigated.
Borg pointed out that the investigation focuses on whether Genesis and other crypto companies influenced investors towards crypto-related securities without obtaining proper registration.
The investigation is another chapter in the Genesis saga as the company revealed that it had around $175 million worth of funds in an FTX trading account. On Nov. 16, Genesis announced that it had temporarily suspended payouts, citing “unprecedented market turmoil” following FTX’s Nov. 11 collapse.
The company is reportedly struggling to raise funds for its lending unit. However, Genesis has refuted speculation about its “impending” bankruptcy due to a $1 billion shortfall. On Nov. 22, the company told Cointelegraph:
“We have no plans to file for bankruptcy immediately. Our goal is to resolve the current situation amicably without having to file for insolvency. Genesis continues to have constructive discussions with creditors.”
As Cointelegraph reported on Nov. 23, Genesis has hired restructuring consultants to review all possible options, including but not limited to possible bankruptcy. Moelis & Company, an investment bank, was hired by the firm to review options. while people familiar with the situation stressed that no financial decisions had been made and that the company may still be avoiding bankruptcy.
Genesis has been in the spotlight amid fears of industry contagion following the bankruptcy of FTX along with its sister company Grayscale Investments and its parent company Digital Currency Group.
A Nov. 18 Grayscale tweet reassured investors that all digital assets underlying Grayscale’s digital asset products are held in Coinbase’s custody, citing a letter from Alesia Haas, Coinbase’s Chief Financial Officer, and Aaron Schnarch, CEO of Coinbase Custody.
4) All digital assets underlying Grayscale’s digital asset products are held in custody by Coinbase Custody Trust Company, LLC. Read more from @coinbaseAlesia Haas, CFO of , and Aaron Schnarch, CEO of Coinbase Custody: pic.twitter.com/InBP9zPDkC
— Grayscale (@Grayscale) November 18, 2022
Cointelegraph reached out to Genesis Global Capital but received no response prior to publication.
Update (Nov 26 1:00 UTC): This article has been updated to clarify that Aaron Schnarch is the CEO of Coinbase Custody, not Coinbase.
