Genesis Seeks to Avoid Bankruptcy Amid Crypto Crisis

Genesis' Bankruptcy Avoidance Efforts

Genesis, a U.S. cryptocurrency brokerage, is actively working to avoid bankruptcy following reports of creditor groups organizing with restructuring lawyers. The firm is engaging with legal experts to prevent a scenario similar to the rapid bankruptcy of crypto exchange FTX. Genesis is focused on resolving issues within its lending business without filing for bankruptcy.

Strategic Discussions and Investigations

The company has initiated discussions with potential investors, major creditors, and borrowers, including prominent firms like Gemini and Digital Currency Group (DCG). These talks aim to stabilize Genesis' lending operations and improve overall liquidity. Meanwhile, U.S. state securities regulators are investigating Genesis Global Capital as part of a broader inquiry into the crypto industry's interconnected nature.

Asset Preservation and Liquidity Challenges

To navigate current challenges, Genesis has enlisted the expertise of investment bank Moelis & Company. Their collaboration seeks to devise an optimal strategy for asset preservation. Genesis Trading's crypto lending division recently suspended customer redemptions, directly linked to the abrupt collapse of FTX. This suspension follows an incident where Genesis' derivatives business had $175 million in locked funds.

Financial Obligations and Future Plans

Genesis Trading is owned by Digital Currency Group, which owes $575 million to Genesis' lending arm. The CEO of Digital Currency Group, Barry Silbert, has addressed these financial obligations with shareholders. Genesis remains committed to finding solutions that address its clients' needs and ensure the sustainability of its operations in the volatile crypto market.