Moelis & Company is said to have been hired to assist the ailing lending business in exploring all possibilities. Genesis Global Capital, a cryptocurrency lending business, has apparently recruited a restructuring counsel to investigate all conceivable possibilities, including, but not limited to, bankruptcy.
According to a Nov. 22 New York Times story, the firm has recruited investment bank Moelis & Company to examine possibilities. However, persons familiar with the matter have emphasized that no financial decisions have been taken and that the company can still escape bankruptcy.
Interestingly, Moelis & Company was one of the firms hired by Voyager Digital after it froze withdrawals and deposits on July 1 to investigate “strategic alternatives.”
Voyager Digital filed for Chapter 11 bankruptcy in the Southern District of New York a few days later as part of a restructuring plan that would eventually “return value to clients.”
After a Nov. 21 Bloomberg article claimed otherwise, a Genesis spokeswoman recently told Cointelegraph that the company has no “imminent” plans to file for bankruptcy.
“We have no immediate intentions to declare bankruptcy.” Our objective is to address the current issue amicably, without the necessity for bankruptcy. “Genesis continues to have positive discussions with creditors,” the spokeswoman stated.
It is said that Genesis is seeking between $500 million and $1 billion from investors to overcome a gap caused by “extraordinary market turbulence” and the collapse of crypto exchange FTX.
According to a November 22 Bloomberg report, the troubled lending firm has $2.8 billion in outstanding loans on its balance sheet, with approximately 30% of its lending made to “related parties” such as its parent company Digital Currency Group and its affiliate and lending unit, Genesis Global Trading.
According to a newly circulated letter from Digital Currency Group CEO Barry Silbert, the company owes Genesis Global Capital $575 million, due in May 2023.
Since FTX’s demise on November 11, all eyes have been on Genesis, Grayscale Investments, and its parent business Digital Currency Group, with fears that they would become the next victims of the epidemic.
Over the last week, all three firms have attempted to assuage investor concerns.
In a Nov. 17 tweet, Grayscale Investments informed investors that “the safety and security of the holdings underpinning Grayscale digital asset products remain unchanged,” alluding to Genesis Global Trading’s withdrawal suspension, adding that its products continue to operate normally.
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
Despite suspending client withdrawals in its lending business, Genesis has stated that its spot and derivatives trading and custody businesses “remain fully operational.”
Genesis’s spot and derivatives trading and custody businesses remain fully operational. We continue to support our clients who rely on us during volatile market conditions to manage their risk and execute on their business strategies.— Genesis (@GenesisTrading) November 16, 2022
Meanwhile, Digital Currency Group CEO Barry Silbert’s last letter to investors reassured investors that DCG is on target to generate $800 million in revenue in 2022.
“We have survived prior crypto winters, and while this one may feel harsher, we will emerge stronger as a group,” he added.