Genesis Global Capital, a crypto lending company, has hired restructuring advisors to discuss a possible bankruptcy, reports revealed on Tuesday.
The firm has sought advice from investment bank Moelis & Company to discuss its options, adding it has not made a final decision on the matter, a 22 November New York Times report claims, citing sources familiar with the matter.
The investment firm also worked with Voyager Digital after the latter suspended transactions in early July this year, citing the need to explore “strategic alternatives” just days ahead of its bankruptcy.
The company filed Chapter 11 bankruptcy in New York to restructure and “return value to customers,” it said at the time.
We have hired the best advisors in the industry to explore all possible options. Next week, we will deliver a plan for the lending business. We’re working tirelessly to identify the best solutions for the lending business, including among other things, sourcing new liquidity.
— Genesis (@GenesisTrading) November 16, 2022
In a statement to numerous media outlets, a Genesis spokesperson said: “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.”
According to sources, the troubled lending firm is seeking from $500 million to $1 billion to tackled issues from “unprecedented market turmoil,” namely the collapse of cryptocurrency trading exchange FTX.
Bloomberg reported on 22 November that Genesis owes creditors $2.8 billion. Roughly 30 percent of the loans funded “related parties” such as its parent company Digital Currency Group and its affiliate and lending wing, Genesis Global Trading. Grayscale Investments has also been affected.
Digital Currency Group owes roughly $575 million to Genesis Global Capital by May 2023, a letter from the former’s chief executive Barry Silbert read.
8) We have compiled more information for investors on our website. We hope to alleviate any potential uncertainties and reaffirm the safety and security of the assets underlying Grayscale’s products. https://t.co/MvTfUoKCdE
— Grayscale (@Grayscale) November 18, 2022
Grayscale Investments tweeted to investors: “the safety and security of the holdings underlying Grayscale digital asset products are unaffected”
Silbert also stated that his firm was set to receive $800 million USD in earnings this year, adding: “We have weathered previous crypto winters and while this one may feel more severe, collectively we will come out of it stronger.”
