Jan 18, 2023
Crypto firm Genesis is preparing to file for bankruptcy
Crypto should go through sorting out and could be a lot healthier commodity at the end: Greg Taylor
Genesis Global Capital is laying the groundwork for a bankruptcy filing as soon as this week, according to people with knowledge of the situation.
The cryptocurrency lending unit of Digital Currency Group has been in confidential negotiations with various creditor groups amid a liquidity crunch. It has warned that it may need to file for bankruptcy if it fails to raise cash, Bloomberg previously reported.
Representatives at Genesis Global Capital didn't immediately respond to requests for comment. A representative for DCG declined to comment. Talks are ongoing and plans could change, the people added.
Financial pressure at Barry Silbert's DCG began to emerge after the collapse of hedge fund Three Arrows Capital. Genesis suspended withdrawals in November, soon after crypto exchange FTX — where Genesis held some of its funds — filed for bankruptcy. The failures have had ripple effects on crypto exchange Gemini Trust, run by Cameron and Tyler Winklevoss. Gemini Earn — a service that let Gemini's users get yield for lending out their coins through Genesis — stopped redemptions as well.
Creditors, Genesis and DCG exchanged several proposals, but have so far failed to come to an agreement, the people said. Kirkland & Ellis and Proskauer Rose have been advising groups of creditors.
DCG told shareholders that it's suspending quarterly dividends in an effort to conserve cash, according to a Jan. 17 letter to shareholders seen by Bloomberg.