On a recent edition of Unchained's “The Chopping Block,” Haseeb Qureshi, Managing Partner at Dragonfly Capital, highlighted the probable ramifications of Genesis going bankrupt.
Qureshi stated on the December 3 edition of Unchained's 'The Chopping Block,'
“It appears that there was a lot of funny busy in the accounting department at Genesis at a very high level.”
According to Qureshi, the Digital Currency Group's (DCG) $1.1 billion promissory note to Genesis may be “callable” in the case of liquidation, requiring DCG to pay the note's complete value immediately.
Qureshi also mentioned DCG's reported $2.1 billion purchase of Genesis' “bad debt” in Three Arrows Capital (3AC).
However, Qureshi pointed out:
“DCG does not have $2.1 billion in cash to cover the promissory note's face value.”
Qureshi presented two possible possibilities in the event that Genesis went bankrupt.
The first scenario involves “Genesis filing [for bankruptcy] and then pulling DCG into bankruptcy,” resulting in a complicated bankruptcy procedure.
The second possibility is that “Genesis goes bankrupt, and then the note is auctioned off at a value less than par,” but DCG is saved.
Qureshi continued by saying that “it looks very, very likely” that Genesis will have to file for bankruptcy or go through a restructuring in which creditors agree to lower claims at Genesis in order to avoid bankruptcy.
“The bankruptcy would be extremely detrimental to Genesis' creditors.”
Genesis was forced into bankruptcy, according to Robert Leshner, creator of Compound and a creditor to Genesis.
Leshner elaborated on the probable ramifications and implications of such a scenario, as well as his expectations of Genesis declaring bankruptcy:
“Any number of creditors could force them to declare bankruptcy [...] ”I believe the chances are strong, around 80%.
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