Crypto firm Genesis preparing to file for bankruptcy within days: Sources
Sign up now: Get ST's newsletters delivered to your inbox
Genesis Global Capital has warned that it may need to file for bankruptcy if it fails to raise cash.
PHOTO: REUTERS
Follow topic:
New York – Genesis Global Capital is laying the groundwork for a bankruptcy filing as soon as this week, according to people with knowledge of the situation.
The cryptocurrency lending unit of Digital Currency Group (DCG) has been in confidential negotiations with various creditor groups amid a liquidity crunch. It has warned that it may need to file for bankruptcy if it fails to raise cash, Bloomberg previously reported.
Representatives for Genesis Global Capital did not immediately respond to requests for comment. A representative for DCG declined to comment. Talks are ongoing and plans could change, the people added.
Financial pressure at DCG began to emerge after the collapse of hedge fund Three Arrows Capital. crypto exchange FTX
Gemini Earn, a service that let Gemini’s users receive yield for lending out their coins through Genesis, stopped redemptions as well. Gemini also now says that Genesis owes it US$900 million (S$1.2 billion) in connection with that product.
The United States Securities and Exchange Commission last week said it had charged Genesis and Gemini with illegally selling securities to hundreds of thousands of investors through their crypto lending programme.
Creditors, Genesis and DCG exchanged several proposals but have so far failed to come to an agreement, the people said. Law firms Kirkland & Ellis and Proskauer Rose have been advising groups of creditors.
The company is working towards a restructuring plan and have swopped proposals with its creditors, some of whom have suggested receiving a mix of cash and equity from DCG, according to people familiar with the talks.
DCG told shareholders that it is suspending quarterly dividends in an effort to conserve cash, according to a Jan 17 letter to shareholders seen by Bloomberg.
DCG property CoinDesk, a crypto news site, confirmed in a statement on Wednesday that it engaged financial advisory firm Lazard as an adviser to explore options, including a partial or full sale. BLOOMBERG, REUTERS
