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Crypto Brokerage Genesis Global Capital May Be Nearing Bankruptcy Filing: Reports
The collapse of FTX in late 2022 may have been the final straw for Genesis, which earlier that year reportedly suffered losses of several hundred million dollars due to its exposure to failed crypto hedge fund Three Arrows Capital.
By Nelson Wang
Updated May 9, 2023, 4:06 a.m. Published Jan 18, 2023, 6:54 p.m.
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Genesis Global Capital, the institutional crypto brokerage whose lending unit halted customer withdrawals in the aftermath of FTX's failure, is laying the groundwork for a bankruptcy filing, according to reports.
Bloomberg reported Genesis is in confidential negotiations with various creditor groups, with the company warning it could seek bankruptcy protection if it fails to raise capital.
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The Block reported Genesis is in talks with creditors about a prepackaged bankruptcy plan, which would mean that the two sides would come to a restructuring agreement prior to any filing and that the deal would be then be made final in bankruptcy court.
Since the collapse and bankruptcy of crypto exchange FTX in November, Genesis has been scrambling to raise fresh capital or reach a deal with creditors. The company's institutional lending unit had been forced to suspend redemptions and new originations as a result of the FTX implosion. Plus, Digital Currency Group (DCG) its parent company, has come under increasing pressure to make good on $900 million of locked deposits. Genesis late last year retained investment bank Moelis & Co. to assist with exploring options.
Earlier in 2022, Genesis saw its $2.4 billion loan to hedge fund Three Arrows Capital go bust after Three Arrows collapsed because of its exposure to the Terra network, whose token and stablecoin plunged in value.
DCG is also the parent company of CoinDesk.
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What to know:
- Apollo Global Management struck a cooperation agreement to support lending markets built on Morpho’s onchain protocol.
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- The move follows BlackRock's push into decentralized finance earlier this week, listing its tokenized fund and buying tokens of decentralized exchange Uniswap.
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