Cryptocurrency lending firm Genesis Global Capital and other crypto firms are under investigation by securities regulators in the United States, according to reports on Nov. 25. 

Joseph Borg, Alabama Securities Commission Director, confirmed that its state and several other states are participating in inquiries regarding Genesis’ alleged ties to retail investors, including if Genesis and other crypto firms might have violated securities laws, Barron’s reported. It is still unclear what other companies are being investigated.

Borg noted that the investigation focuses on whether Genesis and other crypto companies influenced investors on crypto-related securities without obtaining the proper registration.

The investigation is another chapter in the Genesis saga after the company revealed around $175 million worth of funds stuck in an FTX trading account. On Nov. 16, Genesis announced it had temporarily suspended withdrawals, citing “unprecedented market turmoil” following FTX’s collapse on Nov. 11.

The firm is reportedly facing difficulties raising money for its lending unit. However, Genesis has refuted speculation on an “imminent” bankruptcy due to a $1 billion shortfall. The company told Cointelegraph on Nov. 22 that it does not plan to file for bankruptcy “immediately” and continues to negotiate with creditors in a constructive manner:

“We have no plans to file bankruptcy imminently. Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors.”

Genesis hired restructuring advisers to explore all possible options that include, but aren’t limited to, a potential bankruptcy, as reported by Cointelegraph on Nov. 23. Moelis & Company, an investment bank, has been hired by the firm to explore options, while people familiar with the situation emphasized that no financial decisions have been made and that the company may still avoid bankruptcy.

Genesis has been in the spotlight due to concerns of a supposed contagion in the industry as a result of FTX’s bankruptcy, along with its sister company, Grayscale Investments and their parent company Digital Currency Group.

A tweet from Grayscale on Nov. 18 reassured investors that all digital assets underlie Grayscale’s digital asset products are stored under Coinbase’s custody, citing a letter from Coinbase’s CFO Alesia Haas and CEO Aaron Schnarch.

4) All digital assets that underlie Grayscale’s digital asset products are stored under the custody of Coinbase Custody Trust Company, LLC. Read more from @Coinbase’s CFO Alesia Haas, and CEO of Coinbase Custody Aaron Schnarch: pic.twitter.com/InBP9zPDkC

— Grayscale (@Grayscale) November 18, 2022

Cointelegraph reached out to Genesis Global Capital, but did not receive a response prior to publication.