Bankruptcy seemed to be the theme of the crypto-verse this year. A plethora of firms were facing insolvency over the last couple of months. Prominent crypto brokerage firm, Genesis, however, was trying hard to avoid going underwater.
As per recent reports, Genesis was figuring out ways to avoid bankruptcy. The creditors of the firm were in discussions with restructuring lawyers in order to steer away from insolvency. The creditors were working with law firms like Proskauer Rose and Kirkland & Ellis.
Through this, they intend to seek an emergency loan of $1 billion that would bring respite to the firm.
The main motive of these creditors was to prevent the occurrence of a situation similar to that of FTX. Addressing the same, the spokesperson of Genesis stated,
“Our goal is to resolve the current situation in the lending business without the need for any bankruptcy filing.”
Here’s who might pose as Genesis’ saving grace
Sadly, Genesis was exposed to the downfall of FTX as well as Three Arrows Capital. It was recently revealed that the firm poured $2.36 billion into troubled firm Three Arrows Capital. While the crypto brokerage was dealing with this, the collapse of FTX led to another loss of about $7 million. The platform’s derivative business reportedly entailed a total of $175 million in locked funds.
It should be noted that Genesis has around $2.8 billion in outstanding loans.
Hit with immense loss, Genesis was seeking funding in order to avoid bankruptcy. While Binance outrightly said no, Genesis’ interim chief executive A. Derar Islim still had hope in other platforms. In a recent letter to his clients, Islim wrote,
“We’ve begun discussions with potential investors and our largest creditors and borrowers, including Gemini and DCG, to agree on a solution that shores up our lending business’ overall liquidity and addresses clients’ needs.”