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Citing people with knowledge of the situation, the report said
law firms Proskauer Rose and Kirkland & Ellis are being
consulted by creditor groups, who are seeking to avoid a
situation similar to crypto exchange FTX's rapid descent into
bankruptcy.
"Our goal is to resolve the current situation in the lending
business without the need for any bankruptcy filing," a Genesis
spokesperson said.
Representatives for Proskauer and K&E did not immediately
respond to requests for comment.
"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," Genesis' interim chief
executive Derar Islim told clients in a letter seen by Reuters.
The report comes as U.S. state securities regulators are
investigating Genesis Global Capital as part of a wide-ranging
inquiry into the interconnectedness of crypto firms, Barron's
reported last week, citing a comment from the Alabama Securities
Commission director.
Genesis has hired investment bank Moelis & Company "to evaluate
the best possible asset preservation strategy and effectuate a
roadmap," the firm said in the letter.
The crypto lending arm of U.S. digital asset broker Genesis
Trading suspended customer redemptions earlier this month,
citing the sudden failure of FTX, where its derivatives business
has approximately $175 million in locked funds, the company had
said.
Venture capital company Digital Currency Group, which owns
Genesis Trading and cryptocurrency asset manager Grayscale, owes
$575 million to Genesis' crypto lending arm, Digital Currency
Chief Executive Barry Silbert told shareholders this month.
(Reporting by Bharat Govind Gautam and additional reporting by
Jaiveer Shekhawat in Bengaluru; Editing by Cynthia Osterman)
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