Genesis under investigation by the Alabama state regulator

The central theses

  • The Alabama Securities Commission and other state regulators are investigating Genesis Global Capital.
  • The investigation focuses on Genesis’ relationship with retail investors and connections between crypto companies.
  • Genesis Global Capital suspended redemptions on November 16, leaving clients inaccessible to their funds.

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The Alabama Securities Commission and other state regulators are investigating Genesis Global Capital.

Alabama Leads Genesis Investigation

Genesis is examined.

The crypto lending company suspended redemptions and new lending on Nov. 16 due to the sudden collapse of FTX.

Genesis insists it is not bankrupt and has no significant exposure to FTX. However, customers still don’t have access to funds and the company has since turned on a restructuring firm, signaling it’s in a dire situation.

Now, according to Barron’s, a number of state securities regulators have launched an investigation into Genesis.

Joseph Borg, director of the Alabama Securities Commission, announced Friday that his own agency and others from different states are involved in the investigation.

The investigation reportedly focuses on Genesis’ relationship with retail investors, ties between various cryptocurrency firms, and whether those firms have violated securities laws.

Additionally, the investigations aim to determine whether Genesis and other companies have “enticed local residents to invest in crypto-related securities without completing the proper registrations” — a claim securities regulators often make against companies in the crypto industry.

Although Borg did not specify which other states were involved in the investigation, the regulator’s past activity could provide some clues. The Alabama Securities Commission joined with securities regulators in Texas, Kentucky and New Jersey this summer in its investigation into bankrupt crypto lender Celsius.

The same regulators also worked together in cases involving BlockFi, Voyager Digital, and Flamingo Casino Club, making it likely that at least some of those states are implicated in the Genesis case. State regulators from Oklahoma, Vermont and Washington have also been involved in such investigations in the past.

Neither the Alabama Securities Commission nor any other regulatory body has made an official announcement in this regard.

Disclosure: At the time of writing this article, the author of this article owned BTC, ETH and other digital assets.

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