Alleged crimes linked to small-time investors are being looked at in Alabama and numerous other US states.
Securities authorities in the US are looking into cryptocurrency loan company Genesis Global Capital and other crypto businesses, according to reports published on November 25. According to Barron's (1), Joseph Borg, director of the Alabama Securities Commission, confirmed that his state and several others are investigating Genesis' alleged connections to retail investors, including whether Genesis and other cryptocurrency firms may have broken securities laws. What other firms are under investigation is still a mystery.
According to Borg, the main focus of the inquiry is whether Genesis and other crypto businesses improperly persuaded investors to purchase assets tied to cryptocurrencies. Since the corporation disclosed it had money stranded in an FTX trading account worth around $175 million, the probe represents another chapter in the Genesis tale. Following the collapse of FTX on November 11, Genesis (2) reported on November 16 that withdrawals had been temporarily banned due to "extraordinary market turbulence."
What the findings revealed
According to reports, the company is having trouble finding funding for its lending division. Genesis, meanwhile, has denied rumors that it is "imminently" going bankrupt because of a $1 billion shortfall. As revealed on November 23, Genesis has recruited restructuring experts to investigate all alternatives, including but not limited to potential bankruptcy. The company has recruited Moelis & Company, an investment bank, to examine possibilities, although those with knowledge of the matter stressed that no financial decision had been made. The corporation may yet avoid bankruptcy with the changes that have been made.
Due to worries about a ripple effect in the sector following the bankruptcy of FTX, along with its sister business Grayscale Investments and its parent company, Digital Currency Group, Genesis has received attention. According to a tweet from Grayscale on November 18, citing a letter from Coinbase Chief Financial Officer Alesia Haas and Coinbase Custody CEO Aaron Schnarch, all digital assets underpinning Grayscale's digital asset offerings are kept in Coinbase's custody.