By Geoffrey Smith
Investing.com — Trading rose above $16,000 by mid-morning in New York on Tuesday and spiked to a high of $16,587 last night after brokerage firm Genesis Capital downplayed a report suggesting that it could become the next domino to be toppled by the collapse of FTX.
Bloomberg had reported on Wednesday that the brokerage had sought – so far unsuccessfully – up to $1 billion to fill the hole in its lending unit’s balance sheet left by the collapse of FTX. This is a much larger sum than the $175 million she admitted to having trapped in FTX’s system when it collapsed. Arkham Intelligence data suggests that Genesis received over $1 billion in . – the native token of the FTX network – for the past three months, which are now worthless.
Bloomberg cited a potential term sheet for the emergency loan that mentioned the risk of bankruptcy if it failed to secure financing. Genesis Capital then eased the pressure on its liquidity unilaterally by suspending customer withdrawals, a measure that remains in place.
“Our goal is to resolve the current situation in a consensual manner, without the need to file for bankruptcy,” a spokesman for Genesis said late Monday, quoted by Reuters, adding that he continues to have conversations with creditors.
FTX contagion risk has been largely responsible for most cryptoassets falling in recent days as investors decided to put their funds in fiat currency to avoid being hit by the turmoil. The market capitalization of and other stablecoins, a rough indicator of the overall change in cryptocurrency exposure, has steadily declined over the past ten days.
It’s still unclear what can be salvaged from FTX’s wreckage, but its creditors received crumbs of comfort on Tuesday, when the Financial Times reported that bankruptcy administrators had located more cash in FTX’s accounts. its subsidiaries, bringing assets discovered so far to more than $1.24 billion.
Edgar Mosley of Alvarez & Marsal, an advisory firm that advises FTX, said the sum includes about $400 million in accounts tied to Alameda Research, the hedge fund owned by FTX founder Sam Bankman-Fried. and $172 million on the Japanese branch of FTX.
Signs of opportunistic downside buying were also visible in the stock market, where SEC disclosures showed Cathie Wood’s ARK Innovation ETF (NYSE:) added cryptocurrency exchange Coinbase to its holdings. (NASDAQ:) and Grayscale Bitcoin Trust. The latter was trading Monday at the steepest discount on record to the net asset value of its holdings, a sign that investors have serious doubts about its balance sheet. Grayscale, a unit of Barry Silbert’s Digital Currency Group, maintains that its assets are fully collateralized.