Genesis Global Capital on the Brink of Bankruptcy: DCG Subsidiary in Confidential Negotiations with Creditor Groups

Key Points:

  • Genesis Global Capital is preparing to file for bankruptcy
  • Creditor groups are in confidential negotiations with the DCG subsidiary
  • Genesis has been struggling to raise funds for its lending unit
  • Parent firm Digital Currency Group suspended dividends due to liquidity issues with subsidiaries
  • Bankruptcy filing may not be necessary and plans could change

2 minute read

Genesis Global Capital, a popular subsidiary of Digital Currency Group (DCG), is reportedly preparing to file for bankruptcy as early as this week. The crypto lending subsidiary of DCG has been struggling to raise funds to maintain liquidity after FTX’s collapse in November 2022 caused it to halt withdrawals.

According to a report by Bloomberg, Genesis Global Capital has been engaged in confidential negotiations with multiple creditor groups amid liquidity issues that have affected its parent firm, Digital Currency Group. The crypto broker had indicated in November 2022 that a bankruptcy filing may be imminent unless fresh capital was raised to sustain operations.

However, sources close to the matter have stated that a bankruptcy filing may not be necessary and that plans could change. According to a report by The Block, creditors of Genesis are actively involved in negotiating the terms of a possible Chapter 11 bankruptcy filing. It is believed that creditors may agree to a forbearance period between 1-2 years under a prepackaged bankruptcy plan in exchange for cash payments and equity in the Digital Currency Group.

DCG’s founder and CEO, Barry Silbert, has been involved in a public feud with Gemini’s co-founder and President, Cameron Winklevoss. Customers of Gemini’s Earn Program allegedly owe over $900 million to the firm, which has dragged Silbert into the spotlight following a series of open letters published by Cameron Winklevoss.

As the communication regarding the bankruptcy filing is ongoing, the situation may change. Digital Currency Group has revealed that it will be suspending its quarterly dividends to preserve cash following liquidity issues with its subsidiaries. The news of Genesis Global Capital’s potential bankruptcy filing is a blow to the crypto industry, as it highlights the ongoing struggles of crypto lending firms to maintain liquidity in a volatile market.

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