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Genesis declares bankruptcy – Industry roundup: 20 January

Genesis, a crypto lender, declares bankruptcy

Genesis Global Holdco LLC, a cryptocurrency lender, has reportedly filed for bankruptcy, becoming the newest company to struggle following the rapid demise of the FTX exchange and the collapse of the digital asset market in 2022. The court records indicate that the firm, along with its subsidiaries Genesis Global Capital LLC and Genesis Asia Pacific Pte, filed for Chapter 11 bankruptcy protection on Thursday. Genesis Global Capital listed the asset and liability range between US $1 billion and $10 billion, along with over 100,000 creditors, with the top 50 unsecured claims totalling to approximately $3.4 billion.

Genesis reportedly plans to employ Chapter 11 to attempt to dispose of assets or raise funds, with creditors ultimately possessing the reorganized company if those methods fail. The company intends to fund itself in bankruptcy with $150 million in cash on hand. Chapter 11 bankruptcy allows a company to continue operating while attempting to repay creditors.

In the midst of a liquidity crisis, Digital Currency Group (DCG), the parent company, had reportedly been in confidential negotiations with various creditor groups. Genesis had reportedly warned that failure to raise funds could result in bankruptcy. However, the bankruptcy filing is said to exclude Genesis Global Trading and other divisions engaged in the custody, spot trading and derivatives industries.

The digital assets industry has reportedly lost approximately $2 trillion, with numerous crypto lenders struggling as a result. Genesis's lending unit halted withdrawals in November 2022, shortly after FTX, where Genesis held some of its funds, declared bankruptcy. Accordingly, Genesis's lending operation's loan originations and redemptions are still on hold, with the bankruptcy court expected to handle any claims. In addition, Cameron Winklevoss, Co-founder, Genesis, and Barry Silbert, DCG, are reportedly engaged in a heated argument over the loss of client access to $900 million in funds that were reportedly deposited with Genesis.

RTP now accessible via BNY Mellon Pershing’s NetXInvestor platform

Pershing LLC, a BNY Mellon company with over US $2 trillion in assets that reportedly provides clearing and custody services, has revealed the integration of real-time payments (RTP) technology into its NetXInvestor platform. Broker-dealer and registered investment advisor firms reportedly utilize the platform to help clients oversee their portfolios.

RTP, a new type of digital funds transfer infrastructure, allows for real-time deposits and withdrawals, providing brokers and investors with immediate, round-the-clock access to irrevocable and secure funds. Additionally, the real-time electronic billing and payment solution is expected to further enhance and automate BNY Mellon’s suite of digital payables and receivables functions.

With the expanded platform, US companies can reportedly present digital bills to customers in real-time and receive immediate payment. Carl Slabicki, Co-Head of Global Payments, Treasury Services, BNY Mellon, commented that since the launch of RTP, the bank has realized significant advances in client satisfaction and that the change has assisted in protecting the environment by reducing paper-based processes. The new application aims to help expedite and simplify the funds transfers activities for both clients and investors, said reports.

China grants JPMorgan and Standard Chartered permission to broaden operations in the country

JPMorgan and Standard Chartered have reportedly received regulatory approval to grow their businesses in China, following the lifting of certain strict policies in the country. As part of China’s efforts to revive its economy, which was battered by the strict pandemic measures, China is reportedly expediting the process of granting permissions to foreign institutions to increase confidence among foreign investors.

The China Securities Regulatory Commission announced that JPMorgan's asset management division will be permitted to acquire full ownership of China International Fund Management Co. (CIFM), in which it currently holds a 49% stake. The US bank applied to buy out CIFM in 2020.

UK-based bank, Standard Chartered, was also granted approval to establish a new securities brokerage unit in China, said Chinese government officials.

UK SMEs face major roadblock to global trade, reveals CBI and Finastra study

A recent study of small and medium-sized enterprises (SMEs) in the UK conducted by the UK-based Confederation of British Industry (CBI) and Finastra have reportedly revealed that there is a disconnect between companies' intentions and realities as pertains to conducting business abroad. Only 23% of the businesses surveyed said they were not interested in engaging in international trade, despite the fact that only 44% of those companies currently do participate in overseas trades. Due to the alleged obstacles and lack of support cited by respondents, one-third of those surveyed reported that they do not trade globally despite the economic value. The effects of Brexit (23%), the inability of small business to conduct business abroad (16%), and lack of familiarity of foreign markets (15%) are reportedly the common barriers mentioned by respondents.

The CBI and Finastra collaborated with YouGov to poll more than 200 financial senior managers at UK-based SMEs to fully understand current business mindsets toward global trade and the ability to access capital. The survey’s objectives were to obtain insight into the difficulties faced by companies, their mindsets towards finance, and their aspirations for global expansion. The research is reportedly a component of CBI's International Trade Toolkit, aiming to support UK SMEs across all industries in efforts to raise their aspirations for global trade.

Rain Newton Smith, Chief Economist, CBI, commented that the UK's fintech sector can play a significant role in productivity improvements as well as overall economic modernization.

Bottomline aids businesses in combating APP Fraud with Business CoP solution

Bottomline, a US-based business payments and process provider, unveiled its confirmation of payee (CoP) solution for companies, reportedly providing corporate fraud prevention teams with an effective means of combating authorized push payment (APP) fraud. The firm's CoP for business aims to safeguard company payments from APP fraud by validating the recipient's bank account.

APP fraud occurs when a criminal tricks a victim into sending them a sizable funds transfer, typically by posing as a bank representative or other reliable organization.

UK Finance reports that APP fraud losses reached £583 million in 2021, an increase of 22% from the previous year. These data breaches reportedly continued into 2022 with losses totalling £249 million during the first half of 2022. The UK's Payment Systems Regulator (PSR) initiative has reportedly focused its efforts heavily towards reducing APP risks in light of these concerning statistics. The regulator reportedly issued clear instructions last May mandating approximately 400 payment service providers (PSPs) to implement a system to provide CoP to their clients.

Colin Swain, Global Head of Platform and Product Transformation, Bottomline, commented that companies of all scale can now help shield their own business payments by utilizing the API first technology. Rather than the use of third-party bank account databases, instant and batch transactions are reportedly instantaneously authenticated via direct-to-source bank account verifications.

The new solution aims to provide a strong substitute for conventional bank account verification procedures. It reportedly offers approximately 90% coverage for both personal and business accounts, preventing fraud as well as minimizing the management of irrevocable or incorrect payments.

National Australia Bank develops its own stablecoin, AUDN

National Australia Bank (NAB), one of the largest four banks in the continent, will reportedly issue its own stablecoin, AUDN, which is intended to run on the Ethereum and Algorand smart contract blockchains and expected to launch during the summer of 2023. The new coin aims to provide a A$-backed token for clients to settle blockchain transactions in real time.

Howard Silb, Chief Innovation Officer, NAB, commented that the AUDN could reportedly also be utilized for repurchase agreements, international funds transfer, and trading in carbon credits. Moreover, ANZ, a rival bank, reportedly completed its first transaction for its A$DC stablecoin in June and set the precedent for NAB to follow. Victor Smorgon Group reportedly purchased BCAU carbon tokens from Zerocap, an Australian platform for investing in digital assets, using A$DC as the medium of exchange in this transaction.

Jonathon Miller from the Australian cryptocurrency exchange, Kraken, stated that by two of Australia's largest four banks adopting stablecoins, both are setting the precedence on recognizing the potential to significantly improve the efficiency of the Australian financial system through the use of swaps, smart contracts and other use cases.

Swedish PE firm, EQT, cautions on fundraising struggles in the midst of a global M&A downturn

EQT AB, a Swedish private equity firm, will reportedly hold onto its investments for a longer period of time following 2022's slow exit activity due to a decline in transactions globally. In a full-year earnings report released recently, Christian Sinding, Chief Executive Officer, EQT AB, commented that fundraising will reportedly take longer for flagship funds as well, as deal activity has significantly decreased from the previous year, with longer ownership periods anticipated.

The Baring Private Equity Asia business in Hong Kong was reportedly acquired by the Swedish company during the last quarter of 2022 in order to boost economic expansion. The firm cited a market capitalization of approximately US $30 billion, which facilitated a 55% increase in assets under management to €113 billion ($122 billion). Last year's gross fund exits were reportedly at €11.1 billion, declining more than 60%. Nevertheless, Sinding stated that the positive start to 2023 for the equity markets is continuing to improve the likelihood of exiting investments through initial public offerings.

As markets continue to be volatile, EQT claims to remain on high alert for a protracted weakening in market conditions. Sinding also stated that the firm has taken steps all year to cut costs, such as hiring slowly in areas including Private Wealth, North America and Asia. With a target fund size of €20 billion, the EQT X fundraising campaign was reportedly anticipated to be completed in 2023. As of year-end 2022, €15.4 billion had been raised, and as of 2023's current date, another €1 billion had been committed, said reports.

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