A New York financial regulator is ordering crypto firm Genesis Global Trading to pay an $8 million fine after it was found to be in violation of the law. In a new press release, the New York State Department of Financial Services (DFS) says that the crypto trading branch of the Digital Currency Group (DCG) […]
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It is understood Moelis & Company has been brought on to help the troubled lending firm explore all possible options.
Cryptocurrency lending firm Genesis Global Capital has reportedly hired a restructuring adviser to explore all possible options that include, but aren’t limited to, a potential bankruptcy.
It is understood that the firm has hired investment bank Moelis & Company to explore options, while people familiar with the situation have stressed that no financial decisions have been made and that it is still possible for the company to avoid a bankruptcy filing, according to a New York Times report on Nov. 22.
Interestingly, Moelis & Company was also one of the firms engaged by Voyager Digital after it suspended withdrawals and deposits on Jul. 1 in order to explore “strategic alternatives.”
Days later, Voyager Digital filed for Chapter 11 bankruptcy in the Southern District Court of New York as part of a reorganization plan that would eventually “return value to customers.”
However, a Genesis spokesperson recently told Cointelegraph that it had no “imminent” plans to file for bankruptcy after a Nov. 21 report from Bloomberg suggested otherwise.
“We have no plans to file bankruptcy imminently. Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors,” said the spokesperson.
It is understood that Genesis is seeking somewhere between $500 million to $1 billion from investors to cover a shortfall that ultimately stemmed from “unprecedented market turmoil” and the fall of crypto exchange FTX.
According to a Nov. 22 Bloomberg report, the troubled lending firm has $2.8 billion in outstanding loans on its balance sheet, with around 30% of its lending made to “related parties” including its parent company Digital Currency Group along with its affiliate and lending unit, Genesis Global Trading.
A recently circulating letter from Digital Currency Group CEO Barry Silbert states that it owes $575 million to Genesis Global Capital, which is due in May 2023.
Related: Genesis denies ‘imminent’ plans to file for bankruptcy
Since FTX’s collapse on Nov. 11, all eyes have turned towards Genesis, Grayscale Investments, and their parent company Digital Currency Group, with concerns the firms could be the next victims of the contagion.
All three companies have sought to quell investor fears over the last week.
Grayscale Investments reassured investors in a Nov. 17 tweet noting that “the safety and security of the holdings underlying Grayscale digital asset products are unaffected,” referring to the withdrawal halt by Genesis Global Trading adding its products continue to operate as normal.
In the wake of recent events, our investors should know that the safety and security of the holdings underlying Grayscale digital asset products are unaffected.
— Grayscale (@Grayscale) November 16, 2022
Genesis has reiterated that its spot and derivatives trading and custody businesses “remain fully operational” despite the suspension of client withdrawals in its lending business.
Genesis’s spot and derivatives trading and custody businesses remain fully operational. We continue to support our clients who rely on us during volatile market conditions to manage their risk and execute on their business strategies.
— Genesis (@GenesisTrading) November 16, 2022
Meanwhile, the latest letter to investors from Digital Currency Group CEO Barry Silbert reassured their investors that DCG is on track for $800 million in revenue in 2022.
“We have weathered previous crypto winters and while this one may feel more severe, collectively we will come out of it stronger," he said.
On Friday, Grayscale Investments, the world’s largest digital currency asset manager in terms of assets under management (AUM), revealed that three trusts have been filed with the Securities and Exchange Commission (SEC) in order to become SEC reporting companies. The three trusts include individual crypto asset products such as the bitcoin cash trust, the litecoin […]
Genesis Global Trading released its Q1 report on April 28, with corporates leading trading volumes, accounting for $8 billion in spot trading alone.
Leading full-service cryptocurrency prime broker Genesis Global Trading has seen spot trading treble in the first quarter.
Corporate interest accounted for the biggest slice of trading, with Genesis attributing part of its success to its Bitcoin treasury product “Genesis Treasury”.
The Q1 report released on April 28 revealed the firm had processed $31.5 billion in spot trading volume — a 287% increase from $8 billion in Q4 2020. It also saw $10.5 billion in derivatives trading.
Corporates accounted for $8 billion of the total spot trading volume, an increase of 25% from the previous quarter. The growth of corporate trading to account for the largest share was a significant shift from the passive funds and hedge funds that formerly dominated trading in Q4.
“Much of this surge was attributable to a mix of clients taking positions in Bitcoin for the first time, existing clients adding to their positions, and clients choosing to take a more active approach to manage their exposure.” Genesis wrote.
The crypto broker noted that “numbers were bolstered” due in part to the launch of Genesis Treasury — a service designed for corporates to gain exposure to Bitcoin through accumulation strategies such as equity, liquidity, and yielding returns. The firm noted interest in the Genesis Treasury followed the broader level of interest from large institutions entering crypto markets such as Tesla and MicroStrategy:
“As corporate clients began buying Bitcoin for their treasuries in Q1, our ratios shifted. The entrance of companies like Tesla, MicroStrategy and Square led to a wave of interest from corporates looking to work together with Genesis Treasury for their own treasury allocation efforts.”
Genesis also posted strong increases in crypto lending in Q1, adding over $20B in new originations, compared to $7.6B originated in Q4, with active loans outstanding increasing to $9B, up 136.4% from $3.8B at the end of 2020.
Cumulative originations increased 94.8% bringing the total up to $40B in originations since the launch of its lending services in March 2018.
“Our loan portfolio increased substantially in value through a combination of new issuance across cash, ETH, and Decentralized Finance (DeFi) assets alongside a significant rise in asset prices across our existing crypto book,” Genesis wrote.
