Genesis Hires Restructuring Adviser

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  • Crypto giant Genesis has hired a restructuring adviser after it warned it could go bankrupt without further funding
  • Genesis has been impacted by Three Arrows Capital, the FTX collapse and more
  • Digital Currency Group CEO Barry Silbert has said the company will emerge “stronger” after restructuring

Troubled crypto lending Genesis has hired a restructuring adviser after suggestions that it could be filing for bankruptcy, while it was also revealed that potential investors are worried about its relationship with other companies in the same stable. Just days after it was tasked with finding $1 billion in funding to stay afloat, Genesis has now hired investment bank Moelis & Company to explore options, including a potential bankruptcy, according to the New York Times.

Has Genesis Failed to Find Investors?

Genesis and its parent company the Digital Currency Group (DCG) has hit almost all the black ice on the crypto winter roads this year, having had exposure to Three Arrows Capital, Babel Finance and others, and being rocked by the FTX scandal. This left Genesis’ lending arm, Genesis Global Capital, needing to halt redemptions and new loans last week and Genesis itself needing $1 billion to survive.

This was reduced to $500 million this week and it seems that no one has been willing to pony up, leading to  Moelis & Company being brought in to try and rescue the company. This led to DCG CEO Barry Silbert informing investors that although DCG is going through the wringer right now, it has “weathered previous crypto winters, and while this one may feel more severe, collectively we will come out of it stronger.”

Silbert added that DCG’s issues are down to “liquidity and duration mismatch in the Genesis loan book”, clarifying that “these issues have no impact on Genesis’ spot and derivatives trading or custody businesses, which continue to operate as usual.”

Investors Worried About DCG Companies’ Relationships

According to Blomberg, one of the issues raised by those approached for funding this week was the interconnectedness of the money within the DCG. DCG has a liability of $575 million to Genesis, while there also exists a $1.1 billion promissory note, due June 2032, which came about as the DCG stepped in to assume liabilities from Genesis related to the implosion of digital-assets hedge fund Three Arrows Capital.