Crypto Trading Firm Genesis In Search of LifeJacket Amid FTX Contagion

Genesis in Talks

Prominent American Crypto brokerage company Genesis is opting to avoid a ‘bank run’ situation after the firm’s creditors are consulting lawyers to avoid insolvency.

As per anonymous sources, it was found that one group of creditors is seeking advice from law firm Kirkland & Ellis, whereas the another group is consulting with Proskauer Rose. Ever since cryptocurrency exchange FTX filed for bankruptcy protection under Chapter 11, these groups are taking steps to avoid the same situation

A Genesis spokesperson said that their “goal is to resolve the current situation in the lending business without the need for any bankruptcy filing.” Additionally, the lending firm has a total of $2.8 billion in outstanding loans according to its ledger books, which is also related to its parent company, Digital Currency Group (DCG) of almost 30%.

According to the Bloomberg, in a letter sent to the clients in previous week, which speaks on behalf of the Genesis’s interim CEO Derar Islim, to initiate the conversation with the creditors and investors including borrowers, of Genesis and Digital currency group, in order to solve the problem of liquidity crunch and fulfill the needs of users.

Genesis is the sister company of Grayscale and Coindesk under an umbrella of DCG. Genesis officials noted that they have hired Moelis & Co., “to evaluate the best possible asset preservation strategy and effectuate a roadmap.”

FTX, Genesis and More…

The news of payment fulfillment by the FTX parent company was out, to some employees and service contractors, excluding few others. United States regulatory bodies are investigating Genesis Global Capital at the moment.

Earlier, Genesis was struggling to raise $1 billion to support its lending unit; however, it failed to do so. Further, Genesis provided investors with an ultimatum they may file for bankruptcy. Genesis halted withdrawals as soon as the FTX crypto exchange collapsed. The firm has over $175 million of funds locked in the recent crash.

The list of crypto firms affected by FTX’s collapse is longer. Touted as Crypto’s “Lehman Brothers crash moment,” the FTX fallout took down many other firms in its wake including Galaxy, GSR, BlockFi, CoinShares, etc. Investors saw their investments slump to 0 in a matter of days. Sequoia Capital, Blackrock, SoftBank, Temasek, Tiger, are just some of the investors that lost funds in FTX.