Genesis calls in restructuring expert in its fight to avoid bankruptcy

Genesis calls in restructuring expert in its fight to avoid bankruptcy

Cryptocurrency lending firm Genesis Global Capital has reportedly hired a restructuring advisor to explore all possible options including, but not limited to, a potential bankruptcy.

It is understood that the firm has hired investment bank Moelis & Company to explore options, while people familiar with the situation have stressed that no financial decisions have been made and that it remains possible for the company to avoid a bankruptcy filing, according to a New York Times -report 22 November.

Interestingly, Moelis & Company was also one of the firms engaged by Voyager Digital after it suspended withdrawals and deposits on July 1 to explore “strategic options.”

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.”

However, a Genesis spokesperson recently told Cointelegraph that it had no “imminent” plans to file for bankruptcy after a Nov. 21 report from Bloomberg suggested otherwise.

“We have no plans to go bankrupt immediately. Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive talks with creditors, the spokesperson said.

It is understood that Genesis is seeking somewhere between $500 million to $1 billion from investors to cover a shortfall that ultimately stemmed from “unprecedented market turmoil” and the fall of crypto exchange FTX.

According to a Nov. 22 Bloomberg report, the troubled lending firm has $2.8 billion in outstanding loans on its balance sheet, with about 30% of its loans to “related parties” including parent company Digital Currency Group along with its affiliates and lenders. entity, Genesis Global Trading.

A recently circulated letter from Digital Currency Group CEO Barry Silbert states that they owe $575 million to Genesis Global Capital due in May 2023.

Related: Genesis denies “imminent” plans to file for bankruptcy

Since FTX collapsed on November 11, all eyes have turned to Genesis, Grayscale Investments and their parent company Digital Currency Group, with concerns that the firms could be the next victims of the contagion.

All three companies have tried to allay investor fears in the past week.

Grayscale Investments reassured investors in a tweet on Nov. 17, noting that “the safety and security of the holdings underlying Grayscale’s digital asset products are unaffected,” referring to the withdrawal stop by Genesis Global Trading adding its products continue to function as normally.

Genesis has reiterated that its spot and derivatives trading and custody business “remains fully operational” despite the suspension of client withdrawals in its lending business.

Meanwhile, the latest letter to investors from Digital Currency Group CEO Barry Silbert assured his investors that DCG is on track for $800 million in revenue by 2022.

“We’ve weathered past crypto winters, and while this one may feel more severe, we’ll collectively come out of it stronger,” he said.