Genesis crypto brokerage scrambles to keep bankruptcy at bay
Embattled crypto brokerage Genesis is pulling out all the stops and exploring all options to keep bankruptcy attorneys at bay.
Creditors are joining forces with liquidation and reorganization lawyers in an effort to keep the firm afloat. As reported by BeInCrypto, the crypto lending platform suspended withdrawals on the platform on November 16.
The creditors are consulting various law firms, according to a November 30 Bloomberg report, citing unnamed sources. The creditor group is trying to avoid the sinking situation that engulfed FTX International earlier this month.
"Our goal is to resolve the current situation in the lending business without the need for any bankruptcy filings," a spokeswoman said.
Bloomberg reported that Genesis creditors are working with restructuring lawyers to explore options to save the company from bankruptcy. Genesis had previously told its potential investors that it may file for bankruptcy if it fails to raise $500 million. https://t.co/1194gRggsI
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large outstanding balance sheet at origination
The report states that Genesis has approximately $2.8 billion of outstanding debt on its balance sheet. About a third of this was made to related entities including the parent company, Digital Currency Group (DCG).
Its problems stemmed from Alameda's outstanding debts. It also had huge debt with the now-defunct crypto hedge fund Three Arrows Capital (3AC). Over the weekend, DCG revealed it had $2 billion in liabilities, most of which it owed to Origin.
Last week, interim CEO Derar Islam said that Genesis has begun talks with potential investors. It has also worked with its largest creditors and borrowers, including Gemini Exchange and DCG.
In addition, the firm has appointed Moelis & Co. to evaluate strategies and take negotiations forward. Appointed to The lenders are also in discussions with the group Kirkland & Ellis and Proscore Rose, according to Bloomberg.
Genesis has sought a $1 billion loan, citing "liquidity constraints due to certain illiquid assets on the balance sheet". However, it has so far failed to secure bailout investment.
According to the report, some investors are hesitating because of the "interconnectedness between the entities".
Genesis is on the verge of bankruptcy. A Chapter 11 may be inevitable if the investment fails to materialize. The most recent firm to file for bankruptcy was BlockFi on November 27, as reported by BeInCrypto.
Crypto markets have stabilized somewhat since the collapse-induced capitulation of FTX. According to CoinGecko, total capitalization increased by 3.6% on the day to around $890 billion.
Nevertheless, the markets are still in deep bear territory. However, they have consolidated somewhat since the Nov 10 slump.
At press time bitcoin has gained 3.7% since it reached $17,000, and ethereum is up 7.1% to $1,269.
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