Genesis and other cryptocurrency startups may have broken securities laws. The US government is looking into this.
Following the demise of the FTX cryptocurrency exchange, several US regulatory agencies began looking into Genesis Global Capital and other cryptocurrency companies.
Barron’s reported on November 25 that securities regulators were looking into Genesis to see if the company had broken any rules pertaining to the sale of securities.
Joseph Borg, director of the Alabama Securities Commission, verified the announcement of the investigation and stated that his state and others in the US had initiated the probe.
A secondary goal of the probe, as stated by Joseph Borg, is to see if Genesis or any other unregistered crypto companies duped their consumers into investing in securities.
As of this writing, it is unclear which additional crypto firms are being looked into or which states have joined the investigation.
The federal probe in the US is just another chapter in Genesis’s long and storied history. In light of the recent FTX collapse, it is worth mentioning that Genesis disclosed that around $175 million in funds were trapped in the defunct cryptocurrency exchange.
Genesis suspended withdrawals because of “extreme market turbulence” caused by FTX’s insolvency on November 16. “Abnormal withdrawal requests have exceeded Genesis’ liquidity,” the company claimed.
Once Genesis halted withdrawals, rumors spread that the cryptocurrency industry as a whole should brace for a Chapter 11 bankruptcy filing from Genesis. A spokeswoman for Genesis, however, has dismissed the reports, saying:
We don’t have any plans to go bankrupt soon. Our goal is to find a way to work things out without going to court or filing for bankruptcy. Genesis Global keeps talking with its creditors in a positive way.
Also, word started getting out last week that Genesis has $2.8 billion in loans that are still not paid off.