Genesis Global Capital: The Cryptocurrency Lending Unit’s Possible Bankruptcy Filing

Genesis Global Capital: The Cryptocurrency Lending Unit’s Possible Bankruptcy Filing
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Genesis Global Capital: The Cryptocurrency Lending Unit’s Possible Bankruptcy Filing

The cryptocurrency community was shocked to learn that Genesis Global Capital, Digital Currency Group’s cryptocurrency lending unit, is reportedly preparing to file for bankruptcy. In the midst of a liquidity crisis, the company has been in confidential talks with various creditor groups, and it has warned that if it cannot raise cash, it may have to declare bankruptcy.

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The collapse of hedge fund Three Arrows Capital and crypto exchange FTX, where Genesis held some of its funds, put Genesis under financial strain. This had repercussions for cryptocurrency exchange Gemini Trust, which had to halt redemptions for its lending service.

Genesis Global Capital representatives did not immediately respond to requests for comment. A Digital Currency Group representative also declined to comment. The talks are still going on, and plans may change, but the situation remains uncertain.

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According to people familiar with the situation, creditors, Genesis, and Digital Currency Group have exchanged several proposals but have yet to reach an agreement. Groups of creditors have been advised by Kirkland & Ellis and Proskauer Rose. The company is working on a restructuring plan and has exchanged proposals with its creditors, some of whom have suggested that Digital Currency Group receive a mix of cash and equity.

According to a Jan. 17 letter to shareholders obtained by Bloomberg, Digital Currency Group CEO Barry Silbert informed shareholders that the company is suspending quarterly dividends in order to conserve cash. CoinDesk, a crypto news site owned by Digital Currency Group, confirmed to Bloomberg on Wednesday that it had hired Lazard as a financial adviser to explore options.

Photo by Florian Schmetz on Unsplash

The crypto community should be aware of the potential ramifications of this situation and take appropriate precautions with their investments. Because the talks are still ongoing and plans may change, it’s important to keep an eye on the situation for any updates.

The news of Genesis Global Capital’s possible bankruptcy filing serves as a reminder of the risks and volatility that remain in the cryptocurrency market, and investors should always conduct their own due diligence before investing in any crypto projects or platforms. It is also critical to diversify your investments and not keep all of your assets in one location.