Genesis creditors band together in an attempt to avoid bankruptcy, Bloomberg reports

Genesis Global

Genesis Global Capital issued a warning last week about the possibility of bankruptcy, and now some of its creditors are exploring options to prevent such a move.

Bloomberg reports that law firms Proskauer Rose and Kirkland & Ellis are involved in talks with creditors.

Genesis told Bloomberg that the company is attempting to avoid declaring bankruptcy.

Digital Currency Group CEO Barry Silbert said in a letter last week that the company was looking into options.

Genesis Trading was previously reported to be seeking up to $1 billion in emergency funding for its lending arm, but would-be investors such as Binance eventually backed out.

Genesis Global Capital had previously suspended withdrawals and new loan originations and disclosed that it held some funds in FTX.

Furthermore, Genesis, which provides lending and brokerage services, is one of several companies impacted by FTX’s demise, as well as a broader downturn in the crypto market that began earlier this year.

Despite the fact that the related incident was not directly mentioned, Gauntlet also performed modeling and risk assessment for the DeFi lending protocol Aave.

On November 22, it was revealed that Mango Markets hacker Avraham Eisenberg attempted to exploit the protocol by shorting large amounts of Curve (CRV), which at the time was an illiquid token on Aave, forcing the protocol to liquidate the position at a loss due to significant slippage.

However, the slippage was far less than anticipated, and Eisenberg reportedly lost an estimated $10 million in the attack following a CRV short squeeze.

Gauntlet then proposed freezing a number of tokens on Aave v2 that could be vulnerable to an exploit due to a lack of liquidity.

The Compound Finance protocol currently has $654.7 million in total borrowings secured by $2.146 billion in assets.


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