It is conceivable that Moelis & Company is mandated to explore various options not limited to filing for Chapter 11 bankruptcy. The individuals privy to the terms of engagement ruled out that preliminary discussions involved financial decisions. Nevertheless, they have emphasized both parties are prioritizing avoiding a bankruptcy filing.
Coincidentally, Moelis & Company was recently among consultants contracted by Voyager Digital when it also halted customers’ deposits and withdrawals to allow it to explore strategic options.
Unfortunately, Voyager Digital resorted to Chapter 11 bankruptcy filing. The proceedings initiated in the New York-based – Southern District Court sought relief to facilitate its reorganization to return value to the investors and customers.
Genesis Global Capital’s spokesperson ruled out the bankruptcy filing by asserting in the November 21 presser priorities to pursue constructive realignments with its creditors. A preliminary assessment by experts estimates that Genesis is seeking an injection ranging from $500 million to $1 billion to resolve the liquidity crunch.
Contagious Liquidity Crisis
Securing strategic injection is proving difficult as potential investors express uncertainty about losing investment as the Genesis crisis is linked to the unprecedented market turmoil following FTX’s downfall.
In a report published by Bloomberg on November 22, the crypto lender’s outstanding loans are estimated at $2.8 billion. Further, the report estimated 30% of the loans were extended to related parties within the related parties, among them the parent company Digital Currency Group (DCG).
DCG chief executive Barry Silbert acknowledged in a letter circulated last week the $575 debt owed to Genesis Global Capital that it should settle by May 2023. The DCG Group, alongside Grayscale Investments and Genesis Global Capital, has attracted the attention of experts concerned about becoming victims of contagion after the FTX collapse.
Quelling Investors’ Fears
The dramatic nature of FTX Group’s contagious downfall prompted Grayscale Investments to calm investors via November 17 Tweet reassuring them that underlying security holdings to the digital assets remain unaffected. Further, the tweet retaliated against Grayscale Investment’s autonomy from Genesis Global Trading events.
DCG chief executive Silbert calmed investors by announcing DCG is set to realize $800 million in 2022 earnings. Further, Silbert indicated the DCG would overcome the severity of the current crypto winter. Nevertheless, concerns remain over the capability of DCG to rally affiliates to collectively overcome the prevailing turmoil.
Editorial credit: mundissima / shutterstock.com
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