Genesis Hires a Restructuring Expert. Bankruptcy is Considered One of the Options

Genesis Global Capital, a crypto lending company, is reported to have hired a restructuring advisor in order to examine every potential option for the company, including a bankruptcy filing.

A report in the New York Times on November 22 suggests that Genesis Global Capital has hired investment bank Moelis & Company to explore different options, although those with knowledge of the situation have insisted that no financial decision has been taken and the company is still capable of avoiding bankruptcy.

As an interesting side note, Moelis & Company served as a consultant for Voyager Digital’s strategic alternatives investigation after the crypto lender stopped withdrawals and deposits on July 1.

A few days later, the company filed for bankruptcy in the Southern District Court of New York for the purpose of reorganizing the company and returning value to its clients.

Nevertheless, Genesis recently stated to the press that it does not have any immediate plans to declare bankruptcy in response to a Bloomberg report published on November 21.

“Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors,” a spokesperson stated.

Apparently, Genesis is seeking funding in the range of $500 million to $1 billion in order to cover losses caused by FTX’s collapse and the “unprecedented market turmoil” which followed next.

A Bloomberg report published on November 22 indicates that around $2.8 billion in outstanding loans were on the company’s balance sheet. Approximately 30% of its loan portfolio went to “related parties” that included its parent company, Digital Currency Group (DCG), as well as its affiliated lending company, Genesis Global Trading.

According to a recent letter by DCG’s CEO Barry Silbert, his company has an outstanding debt of $575 million to Genesis Global Capital, set to mature in May 2023.

In the wake of FTX’s collapse on November 11, all eyes are now focusing on Genesis, Grayscale Investments, along with their parent company DCG, because concerns have arisen that these firms may be the next ones to be affected by the collapse.

Over the last week, the three companies have tried to soothe investor fears.

An investor-reassuring tweet posted on November 17 by Grayscale Investments stated that “the safety and security of the holdings underlying Grayscale digital asset products are unaffected,” referring to the suspension of withdrawals from Genesis Global Trading. According to the company, its services are operating normally.

In a statement, Genesis said that although the withdrawal of funds in Genesis’ lending business has been halted, its spot, derivatives, and custody businesses have not been affected.

In the meantime, in an investor letter, Barry Silbert, CEO of DCG, assured investors that in 2022, the company would generate $800 million in revenues.