Cryptocurrency lender Genesis Global Capital could file for bankruptcy as early as this week. It is the cryptocurrency lending unit of Digital Currency Group (DCG). The lender is facing liquidity issues and is negotiating with various creditors. The bankruptcy is fluid as of now, as talks are on. Sources say that the groundwork for a bankruptcy filing has been laid but it might not take place if Genesis raises the required funds.
Barry Silbert’s DCG first faced financial issues when the hedge fund Three Arrows Capital collapsed. After crypt exchange FTX collapsed in November, Genesis suspended withdrawals. The crypto lending unit of DCG also held funds in FTX.
These suspensions also affected crypto exchange Gemini Trust, headed by the Winklevoss twins. Gemini users used Gemini Earn as a service to get yield for lending their coins through Genesis. They received interest rates up to 8 percent. Gemini Earn also stopped redemptions.
Last week, the Securities and Exchange Commission (SEC) sued both Genesis and Gemini for its “Earn” crypto lending program. The SEC called it an unregistered securities offering.
People familiar with the ongoing talks said that the crypto lending company has been working on a restructuring plan. Proposals have been exchanged with creditors, some of whom suggested that DCG could provide a combination of cash and equity to its cryptocurrency lending unit Genesis Global Capital.
Bloomberg reported that it has seen a January 17 letter from DCG to its shareholders. It states that the company will be suspending its quarterly dividends in order to conserve its cash reserves.
On Wednesday, in a statement, CoinDesk, a crypto news site that is also owned by Barry Silbert’s Group told the outlet that it had engaged the services of Lazard, as a financial adviser, to find options that could include a partial or complete sale.
According to the Financial Times, Genesis owes more than $3 billion to various creditors. Among these creditors, Gemini customers are owed about $900 million while Dutch Exchange Bitvavo is owed about €280 million.
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