Genesis, A Crypto-Giant, Now Struggles Too After FTX Crash

Genesis, a U.S. cryptocurrency brokerage, announced on Tuesday (29th November) that it was attempting to escape bankruptcy. This was after Bloomberg News reported that the company’s creditors were banding together with restructuring attorneys for the same goal. Genesis together with its lawyers is trying to come up with ways of escaping bankruptcy. 

A stark contrast from Bloomberg’s report on the digital asset brokerage loaning out $50-billion-dollars in 4th quarter 2021.

According to a report, the crypto brokerage has been seeking consultation from Proskauer Rose and Kirkland & Ellis legal firms. And this is a group that businesses frequent when attempting to avert a bankruptcy scenario or all-out business failure.

In layman’s, Genesis is believed to be seeking Proskauer Rose & Kirkland & Ellis to avoid an immediate bankruptcy; something that could resemble cryptocurrency exchange FTX.

Gensis On Now Facing Bankruptcy

A Genesis representative replied, “Our objective is to fix the current lending situation without the necessity for any bankruptcy filing.”

Proskauer and K&E did not care to leave any comments. 

Derar Islim, interim chief executive of Genesis, wrote a letter to clients. Part reads, “we have started discussions with potential investors and our largest creditors and borrowers. This includes Gemini and DCG. to reach a consensus on a solution that meets the interests of our clients while securing the overall liquidity of our loan business.”

A shocking report was released by Barron’s last week, based on a statement from the director of the Alabama Securities Commission. The credible source said Genesis Global Capital is under investigation by American state securities regulators. And the whole investigation is part of a broad investigation into the connections among cryptocurrency firms.

Additional Steps by Genesis

According to the firm’s letter, they have recruited investment bank Moelis & Company “to examine the best potential asset preservation strategy and execute a roadmap.”

Genesis Trading’s crypto lending division began rejecting customer transactions earlier this month. And this included withdrawals of funds. This is credited to the sudden demise of FTX. On Sam Bankman-Fried’s exchange is where Genesis conducted its derivatives business. And that biz under their umbrella has around $175 million in locked assets — the company claimed. 

This month the CEO of venture capital company Digital Currency Group, Barry Silbert, warned shareholders. Silbert claimed that Genesis Trading’s manager Grayscale owed $575 million to Genesis in cryptocurrency. If Grayscale falls behind, a domino effect could fall upon the Trading brokerage.

Nonetheless, Genesis promises they are working day and night to avoid declaring bankruptcy. With advice from their newly appointed law firm, they are hoping that their efforts will bear fruits. 

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