Genesis, the Troubled Crypto Lender, Hires a Restructuring Adviser

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

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

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

“Our goal is to resolve the current situation without the need for filing a bankruptcy,” a spokesman for Genesis said, declining to comment on whether it had hired additional advisers.

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

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

He added, “Genesis leadership and their board decided to hire financial and legal advisors and the firm is exploring all possible options amidst the fallout from the implosion of FTX.”

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