Bitcoin Recovers as Genesis Denies Bankruptcy Risk Report


On Tuesday morning, Bitcoin (BTC) prices quickly recovered and rose back above the $16,000 level after trading platform Genesis downplayed a rumor that it might be the next to fall following FTX’s shocking collapse on Nov. 16.

As Bloomberg had reported erlier, the cryptocurrency brokerage has been seeking up to $1 billion to fill a hole in its lending unit’s balance sheet left by FTX’s implosion.

This is significantly more than the $175 million that Genesis Capital (GC) admitted to having locked in an FTX account when the exchange went under. According to data from Arkham Intelligence, GC had received over $1B worth of FTT tokens from FTX over the last three months. However, these tokens, which have plunged from an all-time high of $79.53 to less than $1.32, are now effectively worthless.

Bloomberg’s report also suggested that bankruptcy could be a possibility if Genesis fails to secure the emergency loan. Following FTX’s implosion, the crypto lender reduced the pressure on its liquidity by suspending redemptions and new loan originations to clients, a measure that is still in effect.

“Our goal is to resolve the current situation consensually without the need for any bankruptcy filing,” a Digital Currency Group (DCG) spokesperson said in an emailed to Reuters late on Monday, adding that it continues to have conversations with creditors.

In recent days, crypto assets have largely declined due to the fear of contagion from FTX. To avoid being impacted by the financial turmoil, investors have moved their digital currency funds into fiat currencies.

Meanwhile, as Bitcoin printed above $16k ($16,200 by 12:06 p.m. PT), signs of opportunistic dip-buying started to appear following SEC disclosures showing that Cathie Wood’s ARK Innovation ETF (NYSE:ARKK) added over 1.3 million shares of Coinbase Global (NASDAQ:COIN) to its position.

Wood also bought 450,000 shares of Grayscale Bitcoin Trust (GBTC), according to data by Bloomberg.

On Monday, GBTC was trading at the biggest discount to its NAV (net asset value) that it has ever traded at, a sign of major doubts from investors about the Trust’s balance sheet. Grayscale, however, maintains its assets are fully backed.

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