According to recent reports, the cryptocurrency lending company Genesis Global Capital has retained the services of a restructuring counsel to look into all potential outcomes, including the possibility of filing for bankruptcy.
According to reports published on November 22nd, 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 a bankruptcy filing. Moelis & Company, an investment bank, has reportedly been hired by the company to help evaluate options for fixing the issue.
Moelis & Company was, intriguingly enough, one of the firms that Voyager Digital hired when the firm temporarily halted withdrawals and deposits on July 1st to investigate possible strategies.
As part of a restructuring strategy to “restore value to customers,“ Voyager Digital filed for Chapter 11 bankruptcy in the Southern District of New York in the following days.
On the other hand, the company has no immediate plans to file for bankruptcy, contradicting a Bloomberg piece published on November 21st that implied otherwise.
The representative official noted that the company continues to positively dialogue with its creditors and no immediate bankruptcy filing is in the works as the company’s goal is to handle the existing problem consensually without any bankruptcy petition.
To make up for a shortfall caused by extraordinary market volatility and the collapse of cryptocurrency exchange FTX, it appears that Genesis is trying to raise funds between $500 million and $1 billion from investors.
According to a report that Bloomberg published on November 22nd, the lending company has outstanding loans totaling $2.8 billion on its balance sheet. Approximately thirty percent of the company’s lending has been done to affiliated parties, including its parent company, Digital Currency Group, and its affiliate and lending unit, Genesis Global Trading.
In an open letter, the Chief Executive Officer of Digital Currency Group, Barry Silbert, alleges that the business owes Genesis Global Capital $575 million and that the payment is due in May of 2023.
Since the closure of FTX on November 11, all the focus has been on Genesis, Grayscale Investments and Digital Currency Group. It is feared that these companies will be the next exchanges to go down.
In the wake of recent events, our investors should know that the safety and security of the holdings underlying Grayscale digital asset products are unaffected. 🧵
— Grayscale (@Grayscale) November 16, 2022
Over the past week, all three corporations have made efforts to alleviate the concerns of their investors.
Grayscale’s Security and Privacy
In a tweet sent out on November 17th, Grayscale Investments said that Genesis Global Trading’s withdrawal halt had no impact on the security and privacy of Grayscale digital asset offerings. It stated that all of the company’s products work despite the withdrawal freeze.
We recognize how challenging this past week has been due to the impact of the FTX news. At Genesis we are entirely focused on doing everything we can to serve our clients and navigate this difficult market environment.
— Genesis (@GenesisTrading) November 16, 2022
In the meantime, the most recent letter to investors from Digital Currency Group CEO Barry Silbert assuaged investor concerns by assuring them that the company is on schedule to generate revenue of $800 million in 2022.
“We have weathered previous crypto winters, and while this one may feel more severe, collectively we will come out of it stronger”.