As Genesis Crypto Lender Teeters on Bankruptcy, CoinDesk Mulls Sale Options

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The crypto market is still lacking in the first weeks of 2023, but it’s inarguably in better shape now than it was at 2022’s close. Price are back on the rise thanks to Bitcoin (BTC-USD) mantling the $20,000 mark once more. Still though, price bumps can’t improve the market conditions for everybody. The devastating effect of the crypto winter on some of the largest centralized crypto institutions is still very much present. Digital Currency Group (DCG), the parent company of the Genesis crypto lender, knows that better than anybody.

Genesis is on the verge of bankruptcy thanks to a major debt owed to clients. DCG, with its back to the wall and a lot of money owed to Genesis, is forced to make a quick decision. As reports are suggesting, its first course of action could be offloading CoinDesk.

Investors are starting to look at the DCG empire as the newest crumbling crypto ecosystem. One of its subsidiaries, Grayscale Investing, is struggling as its many crypto trusts fall to new lows against the prices of the cryptos they represent. But while Grayscale quietly suffers, the spotlight is shining on DCG’s other major subsidiary, Genesis.

Genesis, an institutional crypto lending agency, has been a topic of controversy due to its partnership with Gemini souring. Genesis owes Gemini clients $900 million, and Gemini has frozen withdrawals as it waits for payment. All-in-all, Genesis owes $3 billion to its creditors.

DCG itself owes nearly $1.7 billion to Genesis, making saving the company an even more difficult matter. As a Hail Mary, the company is kicking around the idea of offloading from its venture capital portfolio. One of the most notable companies, CoinDesk, could be the first to go.

Potential CoinDesk Sale Can Help DCG to Bail Out Genesis Crypto Lender

The domino effect from FTX’s collapse have been strong, and there are strong indications the Genesis crypto lender could be the next to fall. Reports suggest the company is reaching out to creditors and warning it could file for bankruptcy protections soon. DCG is opening up its portfolio to help raise funds for the beleaguered company. And, as investors are learning this week, one company is preparing itself.

CoinDesk is perhaps the most well-known of DCG’s subsidiaries. The media company represents one of the most popular outlets for crypto news. DCG has owned CoinDesk since 2016.

The outlet has taken up lots of spotlight in recent months for its breaking coverage of the FTX implosion back in November. Indeed, it was CoinDesk which first highlighted FTX’s precarious balance sheet, causing Binance (BNB-USD) to begin selling its FTX-adjacent assets and catalyzing the liquidity crunch which forced FTX into bankruptcy. Ironically enough, it was this reporting which indirectly put Genesis into its precarious situation.

Wednesday saw word get out that CoinDesk is teaming up with investment bankers at Lazard (NYSE:LAZ). This partnership will help the outlet navigate a potential sale, be it partial or in full. DCG says it has received multiple unsolicited offers for CoinDesk at the end of 2022, including a high offer of more than $200 million. Such a sale would be a massive return for DCG, which bought CoinDesk for just $500,000. However, it would also rid them of a reliable source of income; just last year, CoinDesk raked in $50 million in revenue.

On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Brenden Rearick is a Financial News Writer for InvestorPlace’s Today’s Market team. He mainly covers digital assets and tech stocks, with a focus on crypto regulation and DeFi.

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