Cryptolending platform Genesis Global Capital, part of the Digital Currency Group (DCG), is preparing to file for bankruptcy. According to informed sources Bloombergthe firm will do so in the coming days.
The management of the platform conducts confidential negotiations with various groups of creditors in the face of a liquidity crisis. Bankruptcy plans may be revisited.
In the course of work on the restructuring plan, the company exchanged proposals with creditors. Some of them involve receiving a combination of cash and equity from DCG.
In November, following the collapse of FTX, Genesis Global Capital requested $1 billion in emergency funding after the suspension of crypto lending operations.
Subsequently, the top management of the platform did not rule out bankruptcy under the possible scenarios proposed by the hired investment bank Moelis & Company. In July, the latter advised to take this step crypto broker Voyager Digital. Lenders in late 2022 sought to avoid a chaotic and costly bankruptcy process, according to media reports.
Genesis Global Capital was in trouble following a $2.36 billion default by hedge fund Three Arrows Capital in June. DCG backed the unit with a $1.1 billion bill through 2032. The collapse of FTX made matters worse.
According to media reports, Genesis Global Capital’s debt reached $3 billion. This amount includes claims from clients of the Gemini exchange for $900 million. In early 2023, the platform laid off 30% of its employees.
Gemini co-founder Cameron Winklevoss has called on DCG CEO Barry Silbert to step down in an open letter. The conflict, which went public, increased fears that Genesis would file for bankruptcy.
Earlier, Messari founder and CEO Ryan Selkis predicted that some of the OTC platform’s creditors would convert their claims into preferred shares or new DCG debt, as well as warrants. The process should be supervised by a reputable organization.
Bernstein proposed raising capital, selling non-strategic assets, and also retaining Grayscale, a digital asset management company, as part of the holding, or liquidating GBTC.
Recall that DCG is considering the sale of its subsidiary, CoinDesk.
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