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Cryptocurrency lender Genesis Global Capital is preparing the ground for bankruptcy this week. Bloomberg recently reported the news, citing individuals with knowledge of the situation.
The crypto loan unit has been in confidential trading with several groups of creditors in the midst of a liquidity crisis. The company has recently warned that it could declare bankruptcy if it is unsuccessful in raising funds.
The crypto lender representatives did not immediately respond to comments requests. Sources said discussions would continue and plans may change at any time.
What was wrong with that?
Financial pressure at Barry Silbert's DCG began emerging after the hedge fund Three Arrows Capital collapsed. Genesis suspended withdrawals in November 2022, soon after the cryptocurrency exchange FTX filed for bankruptcy – Genesis held some of its funds in the FTX exchange.
The failures produced ripple effects on the Gemini Trust cryptocurrency exchange run by Cameron and Tyler Winklevoss.
Gemini earn – a service used by gemini users to receive the returns to lend their coins through the business – also ended the buybacks.
According to the sources, the creditors, the digital currency group (dcg), and the genesis exchanged various propositions but failed to agree. Pink proskauer with kirkland.
What's going on with you?
The cryptocurrency lender is working on a restructuring plan and has exchanged a number of proposals with their creditors in the past. The sources said that some creditors also suggested that the company receive a combination of dcg's cash and equity.
Dcg told shareholders that in order to retain liquidity, it began suspending quarterly dividends in a letter dated January 17, 2023.
CoinDesk, a DCG property and cryptocurrency news website, told Bloomberg that it engaged Lazard as a financial adviser to explore options, including a full or partial sale.
On Thursday, Bitcoin saw a dip after ending a rare series of 14-day wins. The largest cryptocurrency has experienced a fall of up to 0.7%, with prices around $20,700 at 9:20 in Tokyo. This change in sentiment is due to a conservative attitude that replaces the risk appetite that drove up various assets earlier in the year.
The industry is still dealing with the consequences of FTX
Other smaller cryptocurrencies, such as Solana, Ether, and Polkadot, also experienced moderate losses. Matt Maley, the chief strategist at Miller Tabak + Co, says, "Bitcoin right now has become a lot overbought and prepare for a short-term withdrawal."
On Wednesday, U.S. equities retreated, and treasury bonds strengthened as a result of concerns about economic growth, and this negative sentiment also impacted digital assets. The cryptocurrency industry is also still dealing with the consequences of the failure of the FTX exchange.
Bitcoin's 14-day relative strength index fell by more than 90 but remains above the "overbought" threshold of 70. This suggests to some strategists that there may be a temporary interruption in the ascending dynamics of Bitcoin in 2023.
Despite this, bitcoin and a measure of the 100 best digital chips have both grown by over 20% this year, partially recovering from the digital asset market downturn of last year. This growth is motivated by the conviction that the rise in interest rates will stop with the slowdown in inflation.
However, Cryptocurrencies have declined by about $2 trillion since peaking in November 2021, leading to a number of defaults and separating many institutional and individual investors from those assets.
