Ava Labs president says downfall of Genesis may be big tragedy over FTX collapse

The president of the tech firm behind Avalanche (AVAX) noted that the crypto sector may face a very shake because of the downfall of Genesis Global Trading.

Genesis Global Trading is a global crypto lender platform, which faced a downfall & suspended withdrawal services in the second week of this month because of the usual panic in the crypto sector, after the downfall of the FTX exchange & FTX affiliated companies. However, nothing is in light, whether Genesis’s back-end team mismanaged the user’s fund or something else because the team already confirmed that they don’t have exposure to the FTX or FTX-affiliated companies. 

Recently John Wu, president of Ava Labs, appeared in an interview with Bloomberg. In the interview, Wu said that if Genesis reaches bankruptcy, then it will be a worse situation than the bankruptcy filing by FTX & FTX affiliated companies like FTXus, Alameda Research, etc. 

“In my seat, I think Genesis is a bigger issue in terms of the capital markets of crypto than even FTX,” Ava Labs official said.

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Further, he explained:

“(The) market makers who need to borrow to do market making, you’re going to see liquidity get sapped out of the markets, spreads widen, no investors want to come in and you have a vicious cycle.”

To this date, the Genesis team hasn’t revealed whether they will file for bankruptcy or if they have a plan B to sustain the operations of the platform back to normal. 

On 16 November, Genesis confirmed that they hired the best advisors in this sector to explore the possible ways to bring out the best possible option for this platform. 

We have hired the best advisors in the industry to explore all possible options. Next week, we will deliver a plan for the lending business. We’re working tirelessly to identify the best solutions for the lending business, including among other things, sourcing new liquidity.

— Genesis (@GenesisTrading) November 16, 2022

Few reports claimed that Genesis will either raise $1 billion in loans or will proceed for bankruptcy because without funding support it can’t run its business again. 

Read also: Elon Musk hints Dogecoin enabled Smartphone is possible

Ava Labs president says downfall of Genesis may be big tragedy over FTX collapse

 

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