The US cryptocurrency brokerage Genesis creditors are seeking options to avoid a bankruptcy filing. According to the people familiar with the matter, Genesis is trying to keep the firm out of bankruptcy and the group of creditors is getting advice from the law firm Proskauer Rose.
Also, another group of creditors is working with Kirkland and Ellis but asked not to be identified because the matter is private. The sources also pointed out that the groups are seeking to prevent chaotic scenarios similar to FTX’s rapid bankruptcy.
Genesis spokesperson said, “Our goal is to resolve the current situation in the lending business without the need for any bankruptcy filing.” However, representatives for Proskauer and K&E didn’t respond on the matter yet.
On Genesis’ balance sheet, the brokerage shows $2.8 billion in outstanding loans, roughly 30% of which were provided to related parties, including its parent company, Barry Silbert’s Digital Currency Group.
The sudden collapse of FTX is responsible for causing turmoil in the crypto market, taking a toll on Genesis as well. In a letter sent to clients, interim Chief Executive Officer Derar Islim said that the firm has already begun talks with potential investors and its largest borrowers and creditors including DCG and Gemini.
The step is taken to find ways to boost liquidity for its lending business and address clients’ needs. Last week, Genesis Global Capital was in talks to hire a restructuring expert to prevent potential bankruptcy. It tapped investment bank Moelis & Co. to advance negotiations and form strategies.
The company is currently trying to raise at least $1 billion in fresh cash for its lending unit. However, no deal has been made to raise the funds.
