Bitcoin and the broader cryptocurrency market were hit with renewed selling pressure on Tuesday after crypto-focused investment bank Genesis flagged a potential bankruptcy risk due to its exposure to recently insolvent exchange FTX.
The world’s largest cryptocurrency sank 3% to $15,787.4 by 18:47 ET (23:4 7 GMT), having slumped as low as $15,504- a fresh two year low- earlier in the day. World no. 2 crypto Ethereum fell 3% to $1,108.81, bringing its total losses this month to nearly 30%.
In the latest casualty of the crypto crash this year, reports said Genesis Global Trading, one of the largest institutional lenders in the space, warned that it could face a potential bankruptcy if it is unable to raise new funding. The bank is reportedly seeking new funds of up to $1 billion, but is yet to find a source.
But the firm said it has no plans to file bankruptcy “imminently.” It has reportedly approached major exchange Binance and private equity firm Apollo Global Management (NYSE:APO) for funds.
The report comes just a week after Genesis’ lending arm suspended withdrawals, as concerns over its exposure to FTX triggered a bank run.
Reports earlier this year showed that Genesis had several outstanding loans to Alameda Research- the crypto trading desk that was linked closely to the FTX bankruptcy. It had also reportedly lost funds through its exposure to hedge fund Three Arrows Capital, which went insolvent earlier this year.
Fellow crypto lender BlockFi filed for bankruptcy earlier this month, while several other smaller players suspended withdrawals or halted certain lending and staking services, as contagion from FTX’s collapse continued to spread.
Amid severely souring sentiment towards the space, total crypto capitalization sank below $800 billion, with several altcoins seeing extended losses. Binance Coin fell 3.4%, while memecoin Dogecoin shed 2.1%.
Recent data showed that institutional investors are piling heavily into products shorting crypto in anticipation of more losses. The full impact of the FTX bankruptcy is also yet to be felt, given that the exchange was at one point the second-largest in the space.
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