US cryptocurrency brokerage Genesis said it was seeking to avoid bankruptcy after Bloomberg news reported on Tuesday that creditors to the firm are organizing with restructuring lawyers to prevent insolvency.
Citing people with knowledge of the
situation, the report said law firms Proskauer Rose and Kirkland & Ellis
are being consulted by creditor groups, who are seeking to avoid a situation
similar to crypto exchange FTX's rapid descent into bankruptcy.
"Our goal is to resolve the current
situation in the lending business without the need for any bankruptcy
filing," a Genesis spokesperson said.
Representatives for Proskauer and K&E
did not immediately respond to requests for comment.
"We've begun discussions with
potential investors and our largest creditors and borrowers, including Gemini
and DCG, to agree on a solution that shores up our lending business' overall
liquidity and addresses clients' needs," Genesis' interim chief executive
Derar Islim told clients in a letter seen by Reuters.
The report comes as US state securities
regulators are investigating Genesis Global Capital as part of a wide-ranging
inquiry into the interconnectedness of crypto firms, Barron's reported last
week, citing a comment from the Alabama Securities Commission director.
Genesis has hired investment bank Moelis
& Company "to evaluate the best possible asset preservation strategy
and effectuate a roadmap," the firm said in the letter.
The crypto lending arm of US digital asset
broker Genesis Trading suspended customer redemptions earlier this month,
citing the sudden failure of FTX, where its derivatives business has
approximately $175 million in locked funds, the company had said.
Venture capital company Digital Currency
Group, which owns Genesis Trading and cryptocurrency asset manager Grayscale,
owes $575 million to Genesis' crypto lending arm, Digital Currency Chief
Executive Barry Silbert told shareholders this month. © Reuters