US crypto broker Genesis Global said it was attempting to avoid bankruptcy after it was reported on Tuesday that the firm’s creditors were coordinating with restructuring lawyers to avert insolvency.
“Our goal is to resolve the current situation in the lending business without the need for any bankruptcy filing,” a Genesis spokesperson said.
According to the report published by Bloomberg, creditor groups are consulting with law firms Proskauer Rose and Kirkland & Ellis in order to avoid a situation similar to crypto exchange FTX’s quick spiral into bankruptcy.
The crypto brokerage is reportedly seeking to raise at least $1 billion as it deals with liquidity struggles following FTX’s implosion. The fresh capital search has included discussions about a prospective investment from crypto exchange Binance, which announced earlier its intention to form an “industry recovery fund” to “help projects who are otherwise strong, but in a liquidity crisis.”
Prior to that, the firm’s lending unit Genesis Global Capital froze redemptions and new loan originations as relayed by its Interim CEO Derar Islim to customers. The redemption halt is due to withdrawal requests exceeding the lender’s liquidity profile; Genesis also disclosed that its derivatives unit had around $175 million tied up and locked in an FTX trading account.
Gemini also previously revealed that Gemini Earn, a yield product offered to customers, functioned in partnership with Genesis’ lending arm. The company, however, affirmed that its customer funds are backed 1:1 and “available for withdrawal at any time.”
Information for this briefing was found via Bloomberg, Reuters, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.