Cryptocurrency lending firm Genesis Global Capital has reportedly hired a restructuring advisor to explore all possible options, including but not limited to possible bankruptcy.
It is understood that the company has hired investment bank Moelis & Company to explore options, while people familiar with the situation have stressed that no financial decision has been made and that it is still possible for the company to avoid a bankruptcy filing, according to a New York Times report in Nov 22.
Interestingly, Moelis & Company was also one of the firms engaged by Voyager Digital after suspending withdrawals and deposits on July 1 to explore “strategic alternatives”.
Days later, Voyager Digital filed for Chapter 11 bankruptcy with the court for the Southern District of New York as part of a reorganization plan that would ultimately “return value to customers.”
However, a Genesis spokesperson recently told Cointelegraph that they have no “imminent” plans to file for bankruptcy after a November 21 report from Bloomberg suggested Otherwise.
“We do not intend to file for bankruptcy any time soon. Our goal is to resolve the current situation in a consensual manner without the need for a bankruptcy filing. Genesis continues to have constructive conversations with creditors,” the spokesperson said.
It is understood that Genesis is looking for somewhere between $500 million and $1 billion investors to cover a shortfall that ultimately resulted from “unprecedented market turmoil” and the fall of crypto exchange FTX.
Aaccording according to a Nov. 22 Bloomberg report, the troubled loan company 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 subsidiary and lending unit, Genesis Global Trade.
A recently released letter from Digital Currency Group CEO Barry Silbert states that he owes Genesis Global Capital $575 million, which is due May 2023.
Related: Genesis denies ‘imminent’ plans to file for bankruptcy
Since the collapse of FTX on November 11, all eyes have been on Genesis, Grayscale Investments and their parent company Digital Currency Group, fearing that the companies are the next victims of the contagion.
All three companies have sought to allay investor fears over the past week.
Grayscale Investments reassured investors in a Nov. 17 tweet by noting that “the safety and security of the holdings underlying Grayscale digital asset products are not affected,” referring to the discontinuation of withdrawal by Genesis Global Trading adding its products continue to operate normally.
As a result of recent events, our investors should be aware that the safety and security of the assets underlying grayscale digital asset products are not affected.
— Grayscale (@Grayscale) November 16, 2022
Genesis reiterated that its cash and derivatives trading and custody businesses “remain fully operational” despite the suspension of client withdrawals in its lending business.
Genesis’ cash trading and derivatives and custody businesses remain fully operational. We continue to support our clients who rely on us in 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 has reassured their investors that DCG is on track for $800 million in revenue in 2022.
“We have weathered previous crypto winters and while this one may seem harsher, collectively we will emerge stronger,” he said.