Cryptocurrency lending firm Genesis Global Capital has reportedly hired a restructuring adviser to explore all possible options, including but not limited to potential bankruptcy.
The firm is understood to have hired investment bank Moelis & Company to explore options, while people familiar with the situation stressed that no financial decisions had been made and it was still possible for the company to avoid bankruptcy. New York Times message on November 22.
Interestingly, Moelis & Company was also one of the firms hired by Voyager Digital after it suspended withdrawals and deposits on July 1 to explore “strategic alternatives.”
A few days later, Voyager Digital filed for Chapter 11 bankruptcy in the Southern District Court of New York as part of a reorganization plan that would ultimately “return value to customers.”
“We are not planning to declare bankruptcy immediately. Our goal is to resolve the current situation consensually without the need for any declaration of bankruptcy. Genesis continues to engage in constructive discussions with creditors,” the spokesperson said.
Genesis is understood to be is looking for somewhere between $500 million and $1 billion from investors to cover the shortfall, which ultimately stemmed from “unprecedented market turbulence” and the fall of the FTX crypto exchange.
ANDaccording to according to a Nov. 22 Bloomberg report, the troubled lender has $2.8 billion in outstanding loans on its balance sheet, with about 30% of its loans to “related parties,” including its parent company Digital Currency Group along with its affiliate and credit unit. , Genesis Global Trading.
A recently circulated letter from Digital Currency Group CEO Barry Silbert states that Genesis Global Capital owes $575 million due in May 2023.
Since the collapse of FTX on November 11, all eyes have turned to Genesis, Grayscale Investments and their parent company Digital Currency Group, with concerns that these firms could be another victim of the contagion.
All three companies have sought to quell investor concerns over the past week.
Grayscale Investments assured investors in a Nov. 17 tweet that “the safety and security of the holdings underlying Grayscale’s digital asset products are not affected,” referring to stop withdrawal by Genesis Global Trading adding her products will continue to work as usual.
Following recent events, our investors should know that the safety and security of the holdings underlying Grayscale’s digital asset products are not affected.
— Grayscale (@Grayscale) November 16, 2022
Genesis reiterated that its spot and derivatives trading and custody businesses “remain fully operational” despite the suspension of the lending client selection.
Genesis spot and derivatives trading and custody remain fully operational. We continue to support our clients who rely on us during volatile market conditions to manage their risks and execute their business strategies.
— Genesis (@GenesisTrading) November 16, 2022
Meanwhile, the latest letter to investors from Digital Currency Group CEO Barry Silbert reassured their investors that DCG is on track for $800 million in revenue by 2022.
“We’ve weathered previous crypto winters and while this one may be tougher, we’ll come out stronger together,” he said.