Bitcoin gains as Genesis plays down bankruptcy risk report
Bitcoin prices climbed back above $16,000 by mid-morning in New York on Tuesday, after brokerage Genesis Capital played down a report suggesting that it was at risk of becoming the next domino to be knocked over by FTX’s collapse.
Bloomberg had reported on Wednesday that the brokerage has been looking – so far without success – for up to $1 billion to fill a hole in the balance sheet of its lending unit left by the collapse of FTX. That’s a much larger sum than the $175 million that it admitted to having trapped in FTX’s system now FTX collapsed. Data from Arkham Intelligence suggest that Genesis had received over $1B in FTT – the native token of the FTX network – over the last three months, which are now effectively worthless.
Bloomberg cited a prospective term sheet for the emergency loan that mentioned the risk of bankruptcy if it failed to secure financing. Genesis Capital subsequently eased the pressure on its liquidity unilaterally by suspending client withdrawals, a measure that remains in place.
