In a bid to avoid bankruptcy, Genesis calls in a restructuring expert

Key points: 

• Genesis Global Capital has hired restructuring advisors to review possible bankruptcy. 
• For that purpose, Moelis & Company bank was hired, which was one of the firms hired by Voyager Digital after it suspended withdrawals and deposits.
• Genesis is aiming to secure between $500 million and $1 billion in funding from investors to cover the eventual funding gap. 
• The struggling lender has $2.8 billion in outstanding loans on its balance sheet. 
• Genesis reiterated that its spot and derivatives trading and custody businesses "remain fully operational," although its lending business has suspended client withdrawals.

Cryptocurrency lending firm Genesis Global Capital has reportedly hired restructuring advisors to review all possible options, including but not limited to possible bankruptcy.

The company is understood to have hired investment bank Moelis & Company to review the options, while the people stressed that no financial decisions have been made and the company still has a chance to avoid bankruptcy. New York Times, Nov. 22.

Interestingly, Moelis & Company was also one of the firms hired by Voyager Digital after it suspended withdrawals and deposits on July 1 to explore “strategic alternatives.”

Days later, Voyager Digital filed for Chapter 11 bankruptcy protection in the Southern District of New York as part of a restructuring plan to ultimately "return value to customers."

However, a Genesis spokesperson recently told that it has no “immediate” plans to file for bankruptcy after a Nov. 21 report from Bloomberg suggested that this was not the case.

"We have no immediate plans to file for bankruptcy. Our goal is to resolve the current situation amicably without filing for bankruptcy. Genesis continues to engage in constructive discussions with creditors," the spokesperson said.

Genesis is understood to be aiming to secure between $500 million and $1 billion in funding from investors to cover the eventual funding gap due to “unprecedented market turmoil” and the fall of cryptocurrency exchange FTX.

According to a Nov. 22 Bloomberg report, the struggling lender has $2.8 billion in outstanding loans on its balance sheet, about 30 percent of which went to "related parties," including its parent company Digital. Currency Group and its subsidiaries and lenders, Genesis Global Trading.

A recently circulated letter from Digital Currency Group CEO Barry Silbert states that Genesis Global Capital owes $575 million due in May 2023.

Since the FTX crash on Nov. 11, all eyes have turned to Genesis, Grayscale Investments, and its parent company, Digital Currency Group, amid fears that these firms could be the next casualties of contagion.

All three companies have tried to allay investor concerns over the past week.

Grayscale Investments reassured investors in a Nov. 17 tweet, noting that “the security of assets held by Grayscale’s digital asset products has not been compromised,” citing the halt in the pullback from Genesis Global Trading, adding that its products continue to operate normally.

Genesis reiterated that its spot and derivatives trading and custody businesses "remain fully operational," although its lending business has suspended client withdrawals.

Meanwhile, a recent letter to investors from Digital Currency Group CEO Barry Silbert assured investors that DCG is on track to hit $800 million in sales by 2022.

“We’ve been through previous crypto winters, and while this winter may be harsher, we’re stronger together,” he said.