Genesis calls in a renovation expert in its fight to avoid bankruptcy

Crypto lending firm Genesis Global Capital has reportedly hired a restructuring consultant to explore all possible options including, but not limited to, a potential bankruptcy.

It is understood that the firm has hired investment bank Moelis & Company to explore options, while people familiar with the situation have stressed that no financial decisions have been made and that it is still possible for the firm to avoid a filing. bankruptcy, according to a Nov. 22 New York Times report.

Interestingly, Moelis & Company was also one of the firms Voyager Digital hired after it paused July 1 withdrawals and deposits to explore “strategic alternatives.”

Days later, Voyager Digital filed for Chapter 11 bankruptcy in the Southern District Court of New York as part of a reorganization plan that would ultimately “give value back to customers.”

However, a Genesis spokesperson recently told Cointelegraph that it has no “imminent” plans to file for bankruptcy after a Nov. 21 report by Bloomberg suggested otherwise.

“We have no plans to file for bankruptcy any time soon. Our goal is to resolve the current situation by mutual consent without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors,” the spokesman said.

It is understood that Genesis is seeking somewhere between $500 million to $1 billion from investors to cover a shortfall that ultimately resulted from “unprecedented market turmoil” and the fall of cryptocurrency exchange FTX.

The troubled loan firm has $2.8 billion of outstanding loans on its balance sheet, with about 30 percent of its loans to “related parties,” including its parent company, according to a Nov. 22 Bloomberg report. Digital Currency Group together with its affiliate and unit lending company, Genesis Global Trading.

A recently circulated letter from Digital Currency Group CEO Barry Silbert says it owes $575 million to Genesis Global Capital, due May 2023.

Related: Genesis denies “imminent” plans to file for bankruptcy

Since the collapse of FTX on November 11, all eyes have turned to Genesis, Grayscale Investments and their parent company Digital Currency Group, with concerns that companies could be the next victims of the contagion.

All three companies have tried to allay investor fears over the past week.

Grayscale Investments reassured investors in a Nov. 17 tweet that “the safety and security of the underlying holdings of Grayscale’s digital asset products are not affected,” referring to Genesis Global Trading’s halting withdrawal, adding that its products continue to operate normally.

Genesis reiterated that its spot and derivatives trading and custody businesses “remain fully operational” despite the suspension of customer withdrawals in its lending business.

Meanwhile, the latest letter to investors from Digital Currency Group CEO Barry Silbert has reassured their investors that DCG is on track for $800 million in revenue in 2022.

“We have weathered previous crypto winters and while this one may feel harsher, collectively we will come out stronger,” he said.