Alabama and several other U.S. states are investigating alleged securities violations and connections with retail investors.
Cryptocurrency lending firm Genesis Global Capital and other crypto
firms are under investigation by securities regulators in the United
States, according to reports on Nov. 25.
Joseph Borg, director of
the Alabama Securities Commission, confirmed that its state and several
other states are participating in inquiries regarding Genesis’ alleged
ties to retail investors, including if Genesis and other crypto firms
might have violated securities laws, Barron’s reported. It is still unclear what other companies are being investigated.
Borg
noted that the investigation focuses on whether Genesis and other
crypto companies influenced investors on crypto-related securities
without obtaining the proper registration.
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. On Nov. 22, the company told Cointelegraph:
“We
have no plans to file bankruptcy imminently. Our goal is to resolve the
current situation consensually without the need for any bankruptcy
filing. Genesis continues to have constructive conversations with
creditors.”
Genesis has hired restructuring advisers
to explore all possible options, which include but aren’t limited to a
potential bankruptcy, as reported by Cointelegraph on Nov. 23. Moelis
& Company, an investment bank, has been hired by the firm to explore
options, while people familiar with the situation emphasized that no
financial decisions have been made and that the company may still avoid
bankruptcy.
Genesis has been in the spotlight due to concerns of a
contagion in the industry as a result of FTX’s bankruptcy along with
its sister company, Grayscale Investments, and their parent company,
Digital Currency Group.
A tweet from Grayscale on Nov. 18
reassured investors that all digital assets underlying Grayscale’s
digital-asset products are stored under Coinbase’s custody, citing a
letter from Coinbase chief financial officer Alesia Haas and Coinbase
Custody CEO Aaron Schnarch.
4)
— Grayscale (@Grayscale) November 18, 2022
All digital assets that underlie Grayscale’s digital asset products are
stored under the custody of Coinbase Custody Trust Company, LLC. Read
more from @Coinbase’s CFO Alesia Haas, and CEO of Coinbase Custody Aaron Schnarch: pic.twitter.com/InBP9zPDkC
source link : https://cointelegraph.com/news/american-regulators-to-investigate-genesis-and-other-crypto-firms
