![regulation.webp](https://images.hive.blog/DQmetpvjrgmA1adfsVxM3jM688e749Wy3hKwQUujD95yVku/regulation.webp)
[source](https://thecrypto.app/blog/crypto-regulations-its-benefits-and-consequenses/)

I have written about crypto lender Genesis in recent posts. Those posts have been focused around the companies finical troubles and their liquidity crisis. Reports now say their troubles are increasing as they are being scrutinized by regulators in the state of Alabama and other U.S. states. 

For those that don't know Genesis is one of the latest experiencing financial contagion from the FTX collapse. Genesis lost $175 million on FTX, and although it received a cash bailout of $140 million from parent company Digital Currency Group, customer runs on funds is making it difficult to stay afloat amid the liquidity crunch. Last I heard they are looking for something like another 500 million. Genesis denies it is planning to file for bankruptcy like FTX, but I'm not too optimistic as they need a pretty large cash infusion. 

![ftxestadosunidosdonacion.webp](https://images.hive.blog/DQmXsULRHujAgQs8TfQAQyzFrCVCp9MWTsmRtYdsTSgLdsr/ftx-estados-unidos-donacion.webp)
[source](https://investmentbusinessu.com/wp-content/uploads/2022/11/ftx-estados-unidos-donacion.jpg)

For the past few weeks it's been about the immediate cash problem now they are about to get hit on a new front which might be even more damaging. For regulators, the chief concern is how interlinked crypto firms are with another, potentially sparking more crypto firm collapses in the aftermath of FTX and Three Arrows Capital disasters. It's a bit hypocritical because traditional finical institutions like banks, VCs and Hedge funds are even more intertwined. Just look at the 2008 crisis. However, the spot light is now on crypto so regulators are also looking at the violation of securities laws.

Genesis has been described as the Goldman Sachs of crypto with more than $115 billion in trades last year. They also did about a $130 billion in loans which is why their collapse makes me nervous. On November 16, Genesis suspended withdrawals, citing “unprecedented market turmoil.” Their irresponsible risk exposure along with many others nefarious acts opened the space to extreme risk which we are all now reaping the repercussions of. DeFi is the future and being in the space even I was confused as to how everyone was generating so good yields and returns with out risk. That's were I and well as many professionals were deceived. 

I for one am happy to see some regulatory scrutiny on these bad actors. I have not been against regulations. In fact I have been calling for it for a while. We need common sense regulations that actually protect users and their funds. I think traditional regulations are flawed and are bias towards larger investors and then institutions. With that being said I don't want to see those regulations copy and pasted into crypto. We need to continue the coalition between industry, governments and legacy regulators to map out regulation that will work for us. I can't wait to see what these investigations turn up. 

Posted Using [LeoFinance <sup>Beta</sup>](https://leofinance.io/@cryptictruth/crypto-lender-genesis-under-regulatory-probe)