Crypto Lender Genesis Warns of Possible Bankruptcy If They Fail to Raise New Fund.
Bloomberg reported that Genesis is struggling to raise cash for its lending division and warns potential investors it might file bankruptcy if it cannot do so, citing people familiar with the situation.
Genesis trying to raise at least $1 billion
After FTX collapsed, the company experienced “abnormal withdrawal requests” and has been seeking at least $1 billion in funding, Bloomberg reported.
In an article published by The Block, Genesis has reduced its fundraising target from $1 billion to $500 million in order to raise emergency funds.
Digital Currency Group does not intend to sell any part of its venture portfolio. A significant money-maker for the company, Grayscale, won’t be sold either. It is working with Ducerne Partners LLC.
In a report by WSJ, Genesis did approach Binance and Apollo Global Management to search for new investments. According to sources, Binance rejected the idea to invest in Genesis as they are afraid it could create a conflict of interest from some of Genesis’ business.
The crypto firm response
Genesis responded to Bloomberg’s story by saying “We have no plans to file bankruptcy imminently…Our goal is to resolve the current situation consensually w/o the need for any bankruptcy filing. #Genesis continues to have constructive conversations with creditors.”
FTX’s and Three Arrows Capital’s collapses last week prompted Genesis Global Capital, the crypto lending arm of Genesis Trading, to suspend loan redemptions and originations temporarily.
Digital Currency Group stated that its subsidiaries and other wholly owned entities were not impacted by the incident.
Genesis Trading received a $140 million equity infusion from DCG after reporting locked-up cash on its FTX platform amounting to $175 million.
Meanwhile, Andrew, a crypto analyst said on his Twitter account regarding the news and the reason behind why the firm needed to raise the fund.
BREAKING: @DCGco owes $1.1B to Genesis via a previously undisclosed promissory note that has been hidden from potential investors.
**now we know why DCG is doing a $1B raise, and is getting rebuffed. @Grayscale assets are the only assets receiving any meaningful interest.
— Andrew (@AP_ArchPublic) November 20, 2022
“BREAKING: @DCGco owes $1.1B to Genesis via a previously undisclosed promissory note that has been hidden from potential investors,” he said,
“**now we know why DCG is doing a $1B raise, and is getting rebuffed. @Grayscale
assets are the only assets receiving any meaningful interest,” he added.