Despite the constant shake-ups, many investors are still willing to bet on the crypto sector, and while Genesis is facing customer flight, it is organizing to fix its corporate accounts and rebound.
Digital Currency Group (DCG) is attempting to bail out Genesis, its own brokerage subsidiary, so as to avoid the aftermath of the postponement requiring the immediate repayment of a $350 million loan to Todd Boehly’s Eldridge finance company in the event of the company’s bankruptcy.
In the meantime, Genesis is running for cover following the recent failure of fellow FTX by suspending withdrawals and has approached Moelis, a listed MFO investment bank, to review its system and avoid what happened to SBF’s company.
Boehly who is very active in the market after the collapse of the value of many companies recently also bought Chelsea, the historic English football club and through Eldridge, of which he is the owner, has promoted the increase of DCG’s debt partly through a $600 million loan in a tandem with other investors.
If DCG were to default, the 350 million loan mentioned above would be immediately due and represents the worst possible threat to Genesis as it is the largest loan for the company.
Genesis and Grayscale: common fate in the crypto world?
The Digital Currency Group, founded by billionaire philanthropist Barry Silbert seven years ago, is among the major supporters, especially from an investment perspective, of the cryptocurrency industry and owns both Genesis and Grayscale.
DCG has total debts that amount to $1.6 billion but because of Genesis, Silbert has stated that if things go south he will prioritize repayment of the $350 million outstanding loan with Eldridge in a tie-up with Capital Group, Francisco Partners and investment manager Davidson Kempner Capital Management.
On the relationship with Eldridge DCG claims that:
“is completely separate from the Genesis restructuring strategy and has no bearing on any outcome in Genesis.”
Boehly, who has been investing in the crypto sector for some time, as early as March this year picked up shares in Cross River and in 2021 invested in Blockchain.com.
However, not only Genesis’ clients and its future are on the razor’s edge, but also those of Gemini for triple the amount ($900 million) and the Dutch exchange Bitvavo 280 million).
Despite everything, DCG is still worth $10 billion and in addition to what has already been reported owes Genesis $575 million in loans due in six months and a $1.1 billion promissory note due 10 years issued to cover Genesis’ liabilities after the collapse of Three Arrows Capital.
Genesis’ plan is to stall its customers, which is why it has suspended withdrawals but in the meantime has not been sitting on its hands.
The company is in the process of arranging its accounts starting precisely with the repayment of loans and the search for new liquidity to avoid the dismal fate to which FTX had bound itself.
