Digital Currency Group’s Genesis Global Capital is reportedly making preparations to file for bankruptcy.
Sources have revealed that the company is currently in confidential negotiations, with a plan to initiate bankruptcy proceedings if they cannot raise enough funds.
DCG representatives have declined to comment on the issue, and it is unclear if the plans are set in stone.
The liquidity crisis has been brought on by the collapse of Three Arrows Capital’s hedge fund, as well as Genesis’s withdrawals from FTX, a cryptocurrency exchange that filed for bankruptcy.
Gemini Trust, owned by Cameron and Tyler Winklevoss, have also halted redemptions from their EarnThis service, which allows users to lend their coins via Genesis.
Kirkland & Ellis and Proskauer Rose have been advising groups of creditors, who claim that DCG has made various proposals but have yet to reach a mutual agreement.
The company is currently in the process of restructuring and has proposed to creditors that they receive cash and equity from DCG.
DCG has suspended quarterly dividends in order to conserve cash, and have now employed Lazard as a financial adviser to explore all options, including potential partial or full sales.
The cryptocurrency markets have been on a 14-day winning streak, with Bitcoin prices reaching as high as $20,700. However, a cautious mood has hit the markets, leading to modest losses for smaller tokens like Ether, Solana, and Polkadot.
Maley, chief market strategist at Miller Tabak + Co., suggests that Bitcoin is now “very overbought in the short term,” and is “setting up for a short-term pullback.
The top 100 tokens have seen a more than 20% increase this year, as cooling inflation has brought an end to the interest rate hikes. However, the sector has still lost around $2 trillion since its peak in 1999, with November 2021 seeing a series of explosions that caused retail and institutional investors alike to abandon cryptocurrencies.
Despite this, Bitcoin’s 14-day Relative Strength Index remains above 70, which is the threshold for “overbought” conditions. Some strategists are suggesting that there may be a pause before Bitcoin’s advance by 2023.
Updated: January 19, 2023, 5 :42 a.m.
