Genesis, a US cryptocurrency brokerage, announced on Wednesday that it was attempting to avoid bankruptcy after Bloomberg News reported on Tuesday that the company's creditors were banding together with restructuring attorneys to avoid insolvency.
According to a report citing sources with knowledge of the matter, creditor groups are seeking advice from Proskauer Rose and Kirkland & Ellis legal firms in an effort to avert a scenario resembling the swift bankruptcy of cryptocurrency exchange FTX.
A Genesis spokeswoman stated, "Our goal is to fix the current lending business position without the necessity for any bankruptcy petition."
Requests for comment from Proskauer and K&E representatives were not immediately fulfilled.
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Derar Islim, interim chief executive of Genesis, wrote in a letter to clients that "we have started 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."
The report comes at a time when Genesis Global Capital is being looked into by US state securities regulators as part of a broad investigation into the connections between crypto firms, according to a report last week in Barron's that quoted the director of the Alabama Securities Commission.
According to the firm's letter, Genesis has recruited investment bank Moelis & Company "to examine the best potential asset preservation strategy and execute a roadmap."
The sudden failure of FTX, where its derivatives business has approximately $175 million in locked funds, led the crypto lending division of US digital asset broker Genesis Trading to suspend customer redemptions earlier this month, the company had said.
Genesis Trading and bitcoin asset management Grayscale are both owned by the venture capital firm Digital Currency Group, which also owes $575 million (or around Rs. 4,692 crore) to Genesis' cryptocurrency loan division, according to a statement made this month to shareholders.
