Genesis liquidation could force DCG bankruptcy

Hull Invest

Dragonfly Capital Managing Partner Haseeb Qureshi spoke about the potential consequences of Genesis going into liquidation on a recent episode of Unchained’s “The Chopping Block.”

Discussed on the December 3 episode of Unchained’s “The Chopping Block,” Qureshi said:

“There seems to have been a lot of crazy busyness in accounting at a very high level of Genesis.”

According to Qureshi, Digital Currency Group’s (DCG) $1.1 billion promissory note to Genesis could become “callable” upon liquidation, requiring DCG to pay the full amount of the note immediately.

Qureshi also spoke about DCG’s acquisition of Three Arrows Capital’s (3AC) Genesis “bad debt” reportedly worth around $2.1 billion.

However, Creshi said:

“DCG does not have $2.1 billion in cash to pay the value of the promissory notes.”

Qureshi described two potential scenarios for Genesis going into liquidation.

The first scenario is “Genesis File” [for bankruptcy] After that, we will drive DCG into bankruptcy,” and entered a complicated bankruptcy process.

The second scenario is “Genesis goes bankrupt and the banknotes themselves are auctioned for less than their face value”, but the DCG has managed to prevent bankruptcy somehow.

Qureshi said it was “very, very likely” that Genesis would have to file for bankruptcy or go through a restructuring in which creditors would have to agree to reduce claims on Genesis to avoid bankruptcy. I can see it,” he concluded.

“Bankruptcy would be very detrimental to Genesis creditors.”

Compound founder and Genesis creditor Robert Lechner has spoken out about how Genesis was unintentionally forced into bankruptcy.

Leshner highlighted the potential consequences and implications of such a scenario and detailed his expectations for Genesis to file for bankruptcy.

“Regardless of the number of creditors, it can drive them into bankruptcy. […] I think the odds are high, around 80%. “

Posted In: Bankruptcy, Investment

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