The creditors of the financially troubled OTC platform Genesis Global Capital are seeking options to prevent its bankruptcy. Bloomberg reports, citing its own sources.
Sources said that one group has consulted the law firm Proskauer Rose, while another is working with Kirkland & Ellis.
After the rapid bankruptcy of FTX, Genesis creditors would like to avoid for Genesis a process just as chaotic and costly, insiders said.
“Our aim is to resolve the current liquidity situation in the lending business without the need for any bankruptcy filings,” commented a Genesis spokesperson.
The company has outstanding loans totaling $2.8 billion. About 30% are extended to affiliated entities, including Barry Silbert’s parent company Digital Currency Group (DCG).
On November 16, Genesis froze withdrawals and the issuance of new loans, citing “increased requests” from clients after the FTX collapse. According to NYT sources, the company did not rule out bankruptcy as an option.
WSJ reported a request by Genesis for emergency financing of $1 billion. According to reports, Binance declined to rescue the company due to a potential conflict of interest with DCG.
In a letter to clients, Genesis CEO Derar Islim said the platform has begun talks with potential investors as well as with its largest creditors and borrowers, including Gemini and DCG. The company has hired investment bank Moelis & Company to devise a course of action.
Earlier in July it was reported that hedge fund Three Arrows Capital owed Genesis $2.36 billion. In November the company said that its crypto-derivatives unit had about $175 million blocked in its FTX account.
According to Messari founder and CEO Ryan Selkis, Genesis needs to raise at least $500 million to avoid bankruptcy.
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