Genesis Global Capital has reportedly hired a restructuring advisor to evaluate all possibilities, including bankruptcy.
According to a Nov. 22 New York Times report, it is believed that the company has hired investment bank Moelis & Company to investigate options, though people familiar with the situation have emphasized that no financial decisions have been made and that it is still possible for the company to avoid filing for bankruptcy.
It’s interesting to note that Moelis & Company was also one of the companies hired by Voyager Digital after it stopped accepting deposits and withdrawals on July 1 to investigate “strategic alternatives.”
Days later, as part of a reorganization strategy that would eventually “return value to clients,” Voyager Digital filed for Chapter 11 bankruptcy in the Southern District Court of New York.
However, following a Bloomberg report on November 21 that claimed otherwise, a Genesis spokeswoman recently stated that the company had no “imminent” plans to declare bankruptcy.
“We have no plans to file bankruptcy imminently. Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors,” said the spokesperson.
Genesis is reportedly looking to raise $500 million to $1 billion from investors to make up for a gap that was ultimately caused by “extraordinary market turbulence” and the demise of cryptocurrency exchange FTX.
The struggling lending company, according to a Nov. 22 Bloomberg story, has $2.8 billion in unpaid debts on its balance sheet, with about 30% of those loans going to “associated parties” like its parent company Digital Currency Group and its affiliate and lending unit, Genesis Global Trading.
According to a recently leaked letter from Digital Currency Group CEO Barry Silbert, the company owes Genesis Global Capital $575 million, which is due in May 2023.
Attention shifts to Genesis after FTX’s crash
Since FTX’s demise on November 11, all eyes have been on Genesis, Grayscale Investments, and their parent company Digital Currency Group out of concern that the companies could be the next ones to fall victim to the contagion.
Over the past week, all three firms have made an effort to allay investor concerns.
In response to Genesis Global Trading’s withdrawal halt, Grayscale Investments reassured investors in a tweet on November 17 by stating that “the safety and security of the holdings underlying Grayscale digital asset products are unaffected.” It added that its products are still in operation as usual.
Genesis has reaffirmed that, notwithstanding the suspension of client withdrawals in its loan business, its spot and derivatives trading and custody businesses “are fully operating.”
In the meantime, Digital Currency Group CEO Barry Silbert reassured investors in a letter to investors that DCG is on schedule to generate $800 million in revenue in 2022.
“We have weathered previous crypto winters and while this one may feel more severe, collectively we will come out of it stronger,” he said.
