Genesis Global Capital prepares for bankruptcy, reports say

Genesis Global Capital, a crypto-lending platform within the Digital Currency Group (DCG), is preparing to declare insolvency. According to informed sources Bloomberg, the firm will do so in the coming days.

The platform’s leadership is holding confidential talks with various creditor groups amid a liquidity crisis. The bankruptcy plans may be revised.

In working on the restructuring plan, the company has exchanged proposals with creditors. Some proposals envisage receiving a combination of cash and equity stakes in the DCG group from DCG.

In November, after коллапса FTX Genesis Global Capital sought emergency financing в размере $1 млрд. This followed приостановки криптолендинговых операций.

Subsequently, the platform’s top management did not rule out bankruptcy within possible scenarios proposed by the hired investment bank Moelis & Company. In July the latter advised taking this step криптоброкеру Voyager Digital. Creditors at the end of 2022 were seeking to avoid a chaotic and costly bankruptcy process, according to media reports.

The problems at Genesis Global Capital arose from the default of the hedge fund Three Arrows Capital in June, with losses totaling $2,36 млрд. DCG extended support to the unit amounting to $1,1 млрд in the form of a note maturing in 2032. The collapse of FTX exacerbated the situation.

According to media reports, Genesis Global Capital’s debt volume достиг $3 млрд. This includes claims from Gemini exchange clients of $900 million. In early 2023 the platform cut 30% of its employees.

Gemini co-founder Cameron Winklevoss, in another open letter призвал DCG head Barry Silbert to resign. The public dispute heightened concerns that Genesis will file for bankruptcy.

Earlier, Messari founder and CEO Ryan Selkis predicted that some OTC platform creditors would convert their claims into preferred shares or new DCG debt, as well as warrants. The process should be overseen by an authoritative institution.

In Bernstein, as possible remedies for Genesis Global Capital they proposed raising capital, selling non-core assets, and preserving Grayscale, the group’s digital asset manager, or liquidating GBTC.

DCG is considering the sale of its subsidiary CoinDesk.

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