The start of the Terra domino effect leading to multiple bankruptcies now has Genesis quivering after the 3AC collapse.
It started with Terra Luna
 March of this year saw 3 Arrows Capital managing a reported $10 billion worth of assets. It seems the globally prominent Hedge fund’s founders Kyle Davies and Zhu Su dropped the coins. 3AC’s risky $200 million Luna investment and perilous trading strategies were their downfalls.
Known for borrowing money across the crypto industry and reinvesting in crypto start-ups was risky and apparently lacked due diligence. Combine that with lenders wanting their promise of “20% returns,” saw 3 Arrows hit the bankruptcy bullseye.
Unfortunately, 3 Arrows Capital’s bankruptcy has led to enormous losses for Blockchain Access UK Limited, DRB Panama, BitMex, BockFi, and FTX. It has also been a significant factor in the collapse of Voyager Digital. The situation currently has Genisis quivering after the 3AC collapse. While some companies remain solvent, many are bankrupt or on their way to it.
3AC’s Takedown of Genesis
 Earlier this summer, Genesis Global Trading loaned Three Arrows Capital $2.36 million in loans that lacked adequate collateral. Amid Genesis’s attempts to recover its losses, 3AC files for bankruptcy. Genesis’ parent group Digital Currency Group went on to file a $1.2 billion liquidation request against 3 Arrows Capital. It is estimated that 3AC currently owes $650 million plus in assets.
Genesis’ third quarter statement shows active loans of $2.8 billion. But with liquidity issues, Genesis is no longer allowing withdrawals or taking applications.
Unsecured Loans Destroy Liquidity
 In a less than stellar practice, Genesis was known to offer unsecured loans to help clients weather the bull market earlier to defer selling their holdings. This result was a dead end when Genesis needed to recoup its losses.
Even when loans were secure, Genesis was known to indulge in rehypothecation. A practice where Genesis lends borrowers their client’s collateral instead of locking the funds in place.
The criteria for these unsecured loans were the borrower-requested loan amount, the assets loan denomination, the borrower’s reputation, and the company’s size.
Saving Genesis Amongst Increasing Collapse
 Three Arrows is not the only company whose bankruptcy is affecting Genesis. FTX and Genesis were trading partners. FTX’s bankruptcy holds $175 billion in assets that belong to Genesis.
Three days ago, Genesis Global Capital employed Moelis & Company (the company that assisted in filing bankruptcy for Voyage Digital,) an investment company. GGC hopes to remain solvent and look into possible bankruptcy options. Throughout this process, Genesis has maintained its goal to correct the current situation and avoid bankruptcy.
In August, The 260-person cryptocurrency firm laid off 20% of its employees. To raise capital, Genesis contacted Binance to offer its loan book as an investment, which Binance declined. Binance cited a possible conflict of interest for rejecting the investment offer.
After a failed attempt at acquiring an emergency loan in the amount of $1 million from investors, the company halted loan originations and redemptions.
Is There A Future for Genesis Global Capital
While Genesis is still quivering after the 3AC collapse, US regulators are investigating security laws violations by Genesis Global Capital.
Joseph Borg, the Director of Alabama’s Security Commission, stated Friday morning that Alabama and several other states are focusing on Genesis and several other companies. The investigations revolve around residents being encouraged to invest in non-registered crypto securities.
Despite Genesis’ efforts to remain solvent and a primary crypto brokerage, security commission fines could be its final undoing!
