A report claims that crypto broker Genesis Global Trading may file for bankruptcy this week.
A person familiar with the matter told the Financial Times that a pre-packaged bankruptcy deal is being negotiated with creditors and would include cash and equity in its parent company Digital Currency Group, which is backed by SoftBank.
Genesis owes creditors more than $3 billion and its customers have been unable to withdraw funds since November. This week DCG halted its quarterly dividend payments to shareholders indefinitely as it attempts to preserve liquidity.
Among the $3bn, $900m is owed to customers of Gemini, the crypto exchange owned by twins Cameron and Tyler Winklevoss, and €280m to Dutch exchange Bitvavo.
Meanwhile crypto media outlet CoinDesk – one of the other 200-odd crypto businesses owned by DCG – is reportedly considering a sale to strengthen the balance sheet. According to the Wall Street Journal, financial advisory firm Lazard is exploring potential options for a full or partial sale.
In recent months DCG has reportedly received multiple offers exceeding $200m for CoinDesk, which it acquired for just $500,000 in 2016.
A CoinDesk article in November exposing irregularities in Alameda Research’s balance sheet is thought to have begun the process which led to the collapse of FTX – and therefore the liquidity issues now being faced by Genesis and DCG.
It has also been reported that Lithosphere blockchain core developer KaJ Labs is willing to help DCG with its insolvency issues by extending a credit facility of $830m.
The Lithosphere network aims to eliminate bottlenecks hindering mainstream blockchain tech adoption by offering a robust infrastructure for distributed value transfer and interoperability across multiple blockchain networks.