Genesis About To File For Bankruptcy
A cryptocurrency lender company Genesis Global Capital is apparently on the verge of declaring bankruptcy, which might happen as soon as this week. Following the collapse of leading cryptocurrency exchange FTX in November of last year, the company halted customer redemptions.
At Risk of Bankruptcy: Genesis Global Capital
Genesis Global Capital, a cryptocurrency lender, is planning to declare bankruptcy in the near future, according to sources with knowledge of the situation, as reported by Bloomberg. In the midst of a liquidity crisis, the lending arm of Digital Currency Group (DCG) has been in private discussions with several creditor organizations. If it can’t raise money, the company warned it might file for bankruptcy.
DCG informed shareholders in a letter dated January 17 that it would defer quarterly dividends in a move to save cash, according to Bloomberg, who viewed the document. Furthermore, the DCG-owned cryptocurrency news website CoinDesk confirmed to Bloomberg on Wednesday that it had hired Lazard as a financial advisor to assess options like a full or partial sale.
Genesis Global Capital and its creditors are in discussions regarding a pre-arranged bankruptcy plan, according to a report by the Block. According to one of the sources, the agreement would entail creditors like Gemini, which is owned by the Winklevoss twins, consenting to a forbearance period during which most payments would be delayed for a period of one to two years. Creditors would be compensated with cash sums and shares of Genesis’ parent business, Digital Currency Group.
Crypto Firm Bankruptcy Filings
The bankruptcy filings of cryptocurrency lender BlockFi and cryptocurrency mining company Core Scientific Inc, one of the largest publicly traded companies of its sort in the United States, were two effects of FTX’s failure in November.
Genesis has been trying to raise new funding or reach a settlement with creditors as it stands on the verge of bankruptcy. Due to the bankruptcy of FTX, the company’s institutional lending arm had to stop making new loans and payments. Additionally, the company suffered significant losses totaling several hundred million dollars in the same year as a result of its involvement in the bankrupt cryptocurrency hedge fund Three Arrows Capital.
Over $3 billion of Genesis’ debt is owed to its creditors, including those of Gemini. Its parent company, DCG, is considering selling some of its assets in order to raise funds to pay off this debt. The business is considering the possibility of selling a portion of its interests, which are estimated to be worth $500 million. Nearly 200 cryptocurrency-related projects, including banks, exchanges, and custodians, have received funding from DCG. Additionally, DCG is being investigated by U.S authorities.
