Genesis is under investigation in the U.S.

In the aftermath of the FTX collapse, several U.S. states, including Alabama, opened an investigation of Genesis Global, the lender of paused Genesis Trading, on securities violations and crypto firms’ interconnection.

As reported by Barron’s, Alabama’s Security Commission director Joseph Borg said, “his agency and those of several other states are part of the inquiries, which generally focus on whether Genesis and other companies enticed residents to invest in crypto-related securities without making the proper registrations.” Further, Borg didn’t immediately share the other companies the regulators are working on.

As a reminder, Genesis Trading halted users’ redemptions and created new loans on the platform two weeks ago. On Nov 11, the company tweeted material exposure to FTX of $175K in locked funds. DSG, Digital Currency Group, the parent company of Genesis, then infused $140K equity in the broker.

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On Nov 22. Genesis executives shared with Bloomberg their plans to raise $1B in new capital for its lending unit, Genesis Global. The next day, they shared news of hiring a restructuring advisor, the investment bank Moelis & Company. The decision was made to find another solution other than filing for Chapter 11 of bankruptcy.

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DSG backed the company’s decision by revealing its debt obligations for Genesis amounting to $575M and beginning in 2023. Days after, Alabama’s regulators shared the news of a new open investigation process.

Alabama’s Security Commission direction noted that the investigation is primarily focused on whether Genesis influenced investors to trade crypto-related securities without registration.

Genesis didn’t comment on Barron’s report.

Genesis is in the spotlight not only in the entire crypto community but also with regulators due to the FTX exposure. Everyone is highly concerned about whether DSG’s other company, Grayscale Investments, is affected.

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On Nov.19, the company tweeted that reversers are fully backed and saved. Which, of course, did not relieve the tension because many were expecting the publication of proof-of-reserves.


  • Maksym has denied the existence of crypto as an asset for 3 years when he was working with standard financial instruments. Became Head of Treasury. Won the best bank employee award and left the bank for cryptocurrency exchange the next day. Got a second university degree, but that didn’t stop him from studying finance yet. Combines fiat and crypto experience to be as objective as possible in general matters. His dream is to be interviewed by Bloomberg.

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