Image Courtesy: Money Control
According to sources familiar with the issue, Genesis Global Capital is preparing to file for bankruptcy as soon as this week.
During a liquidity crisis, Digital Currency Group’s bitcoin lending subsidiary has engaged in discreet discussions with several creditor parties. Bloomberg has reported that it has warned that if it cannot raise funds, it may have to declare bankruptcy.
Genesis Global Capital representatives did not reply quickly to calls for comment. DCG declined to comment. The talks are still ongoing, and plans may alter, according to the sources.
Following the failure of hedge fund Three Arrows Capital, financial strains began to show at Barry Silbert’s DCG. Genesis banned withdrawals in November, shortly after the crypto exchange FTX, where Genesis stored some of its cash, declared bankruptcy. The failures have had an impact on Cameron and Tyler Winklevoss’ cryptocurrency exchange, Gemini Trust. Gemini Earn, a business that paid Gemini customers a return for lending out their coins through Genesis, also ceased operations.
According to the sources, creditors, Genesis, and DCG have exchanged various proposals but have yet to reach a deal. Kirkland & Ellis and Proskauer Rose have been counselling creditor groups.
According to persons involved with the negotiations, the business is working on a restructuring plan and has traded offers with its creditors, some of whom have recommended obtaining a mix of cash and shares from DCG.
According to a Jan. 17 letter to shareholders obtained by Bloomberg, DCG informed shareholders that it would cease quarterly payouts in order to preserve cash. DCG property CoinDesk, a crypto news site, disclosed to Bloomberg on Wednesday that it has hired Lazard as a financial consultant to examine alternatives such as a partial or complete sale.
