The financial markets are still feeling the effects of Sam Bankman-demise, Fried’s empire’s and this week could see the bankruptcy filing of DCG’s crypto lending unit.
Genesis Global Capital is preparing to file for bankruptcy as soon as this week according to sources with knowledge of the matter, as first reported by Bloomberg.
In the midst of a liquidity crisis, the Digital Currency Group’s cryptocurrency lending division has been in private discussions with a number of creditor groups. Bloomberg earlier reported that it had issued a warning that if it couldn’t raise money, it might have to declare bankruptcy.
Following the failure of the hedge fund Three Arrows Capital, financial pressure started to build up at Barry Silbert’s DCG. In November, shortly after the bankruptcy filing of the cryptocurrency exchange FTX, where Genesis stored some of its cash, Genesis ceased withdrawals.
The failures had an impact on Cameron and Tyler Winklevoss’ cryptocurrency exchange Gemini Trust. Gemini Earn, a program that allowed users of Gemini to earn interest for lending their coins through Genesis, also halted redemptions.
Creditors, Genesis, and DCG reportedly exchanged multiple proposals, but no deal has been reached as of yet, according to the sources. Both Kirkland & Ellis and Proskauer Rose have provided advice to creditors’ groups.
DCG told shareholders that it’s suspending quarterly dividend payouts in an effort to conserve cash, according to a Jan. 17 letter to shareholders seen.