Bloomberg News reports Genesis Global Capital is doing all possible groundwork and preparing to file bankruptcy, and the unit is planning to do so as soon as this week. It was revealed by individuals that are aware of the situation.
The Groundwork for Preparing for Bankruptcy is on
Digital Currency Group’s cryptocurrency lending unit is in talks with many creditors, and negotiations are on amidst a liquidity crunch. As reported earlier by Bloomberg, the unit had warned that it might have to file for bankruptcy if it cannot raise adequate cash.
Representatives at Crypto Firm Genesis did not respond promptly when requested comments. As per reliable sources, talks are on, and there are chances of the plan changing, people familiar with the situation added.
What Led to the Crisis at the Crypto Firm?
Financial crunch started being felt at Barry Silbert’s Digital Currency Group following the collapse of The Three Arrows Capital, the hedge fund. Withdrawals started being suspended right from November. The condition worsened when FTX started to dwindle as Genesis had some funds invested in FTX and when FTX filed for bankruptcy.
The collapse of FTX caused ripple effects on Gemini Trust, the crypto exchange. Cameron and Tyler Winklevoss run the exchange. Another move by the company includes stopping redemptions for users of Gemini through a service offered by Genesis. This service, known as Gemini Earn, allowed users of Gemini to enjoy profits if they lent out their coins through Genesis.
Bloomberg News reports several proposals were exchanged between DCG, creditors, and Genesis. However, no agreement has been arrived at. Kirkland & Ellis and Proskauer Rose are advising creditor groups.
A Restructuring Plan Might Work Out
It has also come to light that the company is working on a restructuring plan. It has swapped proposals with the creditors. Amongst these creditors, a few offered suggestions that receiving a concoction of equity and cash from DCG could be a good move, as per individuals aware of the proceedings.
DCG shareholders were told that the quarterly dividends were being suspended so that cash could be saved, as per a letter dated January 17th, written to the shareholders and as seen by Bloomberg.
According to DCG property CoinDesk, a crypto news site confirmed to Bloomberg Wednesday in a statement about involving a financial adviser. It said that they had hired the services of Lazard, a financial adviser, to explore options, including a full or a partial sale.
