Genesis, a cryptocurrency brokerage in the United States, said it was attempting to avoid bankruptcy after Bloomberg reported on Tuesday that the firm’s creditors were organizing with restructuring lawyers to avoid insolvency.
According to the report, creditor groups are consulting with law firms Proskauer Rose and Kirkland & Ellis in order to avoid a situation similar to crypto exchange FTX’s rapid descent into bankruptcy.
“Our goal is to resolve the current situation in the lending business without the need for any bankruptcy filing,” a Genesis spokesperson said.
Proskauer and K&E representatives did not immediately respond to requests for comment.
“We’ve begun discussions with potential investors and our largest creditors and borrowers, including Gemini and DCG, to agree on a solution that shores up our lending business’ overall liquidity and addresses clients’ needs,” Genesis’ interim chief executive Derar Islim told clients in a letter seen by Reuters.
The report comes as state securities regulators in the United States are looking into Genesis Global Capital as part of a broader investigation into the interconnectedness of crypto firms, according to Barron’s, which cited a comment from the Alabama Securities Commission director last week.
According to the letter, Genesis has hired investment bank Moelis & Company “to evaluate the best possible asset preservation strategy and implement a roadmap.”
Genesis Trading’s crypto lending arm suspended customer redemptions earlier this month, citing the sudden failure of FTX, where its derivatives business has approximately $175 million in locked funds, according to the company.
Digital Currency Group, which owns Genesis Trading and cryptocurrency asset manager Grayscale, owes $575 million to Genesis’ crypto lending arm, according to Digital Currency Chief Executive Barry Silbert.
(Adapted from EconomicTimes.com)