Genesis Board of Creditors Restructures Attorneys, Examines Ways to Avoid Bankruptcy

For many companies in the crypto sector, 2022 marked the end of the line. Some apparently disappeared overnight. But Genesis creditors are making desperate pleas to save the crypto broker from sinking into bankruptcy.

According to a Bloomberg report, the beleaguered company’s creditors have hired lawyers for the restructuring and are exploring ways to avoid a situation similar to the rapid descent of cryptocurrency exchange FTX into bankruptcy. The law firms Proskauer Rose and Kirkland & Ellis are consulted by creditor groups.

A Genesis spokesperson was quoted as saying:

“Our goal is to solve the current situation in the lending industry without having to file for bankruptcy.”

Configuration problems

Following the bankruptcy of FTX, the cryptocurrency lending arm of US digital asset broker Genesis Trading has announced the end of customer refunds. It was later revealed that the derivatives business had approximately $175 million in closed funds in an FTX trading account.

Genesis spent several days trying to secure $1 billion in capital from potential investors, but failed. It is also reported to be in talks with Binance for another cash injection. However, the cryptocurrency exchange decided to accept the offer due to the conflicts of interest some of its operations might create in the future.

Genesis’s interim CEO, Dirar Islam, recently told clients that the company is in discussions with potential investors and some of its largest creditors and borrowers. This included Gemini, led by Winklevoss and its parent company – Digital Currency Group (DCG). The main goal is to “agree on a solution that enhances the overall liquidity of our lending business and meets the needs of clients,” Islam said in a letter seen by Reuters.

DCG CEO Barry Silbert revealed that the group owes $575 million to Genesis’ trading arm.

Infection spreads, so does the investigation

The FTX saga has prompted several US regulators to launch investigations into not only the collapsed cryptocurrency exchange but other central gatekeepers as well. According to Barron’s, the Securities Commission of Alabama and other states is investigating Genesis Global Capital for securities law violations.

Demands for clarity in the regulatory framework have never been stronger. Christine Lagarde – President of the European Central Bank (ECB) – reiterated her stance, describing asset class supervision as an “absolute necessity” for the European Union (EU). In the US, the FTX collapse remains in focus, with a Senate hearing scheduled for December 1st.

Thursday’s hearing, titled “Why Congress Must Act: Lessons from the FTX Crash,” is one of at least two focused on the downfall of the Sam Bankman-Fried stock exchange.

House Financial Services Committee Chairman Maxine Waters also announced plans to hold a hearing next month to examine the FTX collapse and the broader implications for the digital asset ecosystem.

Genesis Creditors Onboard Restructuring Lawyers’ post, which explores ways to avoid bankruptcy, appeared first on CryptoPotato.

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