Struggling Crypto Lender Genesis Hires Restructuring Advisor

Genesis Global Capital, the struggling crypto lender, has hired investment bank Moelis & Company to explore options, including potential bankruptcy, three people familiar with the situation said.

The people, who requested anonymity because the process is confidential, stressed that no final decision had been made and that it was still possible for the company to avoid filing for bankruptcy.

Genesis previously confirmed it had brought in advisers to help with a liquidity crisis, including consultancy Alvarez & Marsal and law firm Cleary Gottlieb. Moelis advised crypto lender Voyager Digital on its July bankruptcy filing.

“Our goal is to resolve the current situation without the need to file bankruptcy,” a spokesperson for Genesis said, declining to say whether it had hired additional advisers.

Genesis, which is owned by the Digital Currency Group, has been under pressure from its creditors since crypto exchange FTX began to unravel this month. Genesis was a trading partner of FTX and said $175 million of its assets were tied up at FTX when the exchange froze the accounts shortly before the bankruptcy filing this month.

“This is a liquidity and duration mismatch issue in the Genesis loan portfolio,” Barry Silbert, founder and chief executive of Digital Currency Group, said in a letter to clients Tuesday afternoon. “It is important to note that these issues have no impact on Genesis’ cash and derivatives trading or custody businesses, which continue to operate as usual.”

He added, “Genesis management and its board have decided to hire financial and legal advisors and the firm is exploring all possible options amid the fallout from the FTX implosion.”

Last week, Genesis informed its customers that it was halting withdrawals due to liquidity issues. As of the third quarter, Genesis had $2.8 billion in active loans, according to a quarterly statement from the lender.