Genesis, a U.S. cryptocurrency brokerage, declared that it was attempting to avoid bankruptcy.
According to a report citing sources with knowledge of the matter, creditor groups are seeking advice from Proskauer Rose and Kirkland & Ellis legal firms in an effort to avert a scenario resembling the swift bankruptcy of cryptocurrency exchange FTX.
A Genesis spokeswoman stated, their goal is to fix the current lending business position without the necessity for any bankruptcy petition.
Requests for comment from Proskauer and K&E representatives were not immediately fulfilled.
Derar Islim, interim chief executive of Genesis, wrote to clients in a letter obtained by Reuters, they have started discussions with potential investors and their largest creditors and borrowers, including Gemini and DCG, to agree on a solution that shores up their lending business’ overall liquidity and addresses clients’ needs.
The report comes as state securities regulators in the United States are looking into Genesis Global Capital as part of a broader investigation into the interconnection of crypto businesses.
According to the firm’s letter, Genesis has recruited investment bank Moelis & Company to examine the best potential asset preservation strategy and execute a roadmap.
The sudden demise of FTX, where its derivatives business has around $175 million in locked assets, led Genesis Trading’s crypto lending division to restrict customer redemptions earlier this month, the company had claimed.
Genesis Trading and cryptocurrency asset manager Grayscale owe $575 million to Genesis’ crypto lending division, according to a statement made this month by Barry Silbert, the CEO of venture capital firm Digital Currency Group.
