Haseeb Qureshi, the Managing Companion at Dragonfly Capital, mentioned the potential penalties of Genesis going into liquidation on a current episode of Unchained’s “The Chopping Block.”
1/ On a current episode of Unchained’s The Chopping Block, @hosseeb makes a shocking remark in regards to the $1.1 billion DCG-Genesis promissory be aware.
He says the ten yr be aware might have been structured as “callable” within the occasion of a Genesis liquidation.
Here is what that might imply:
— Ryan Selkis 🥷 (@twobitidiot) December 11, 2022
Mentioned on the Dec. 3 episode of Unchained’s ‘The Chopping Block,’ Qureshi stated:
“It appears like there was plenty of humorous busy within the accounting at genesis very very excessive degree”
Based on Qureshi, the Digital Foreign money Group’s (DCG) $1.1 billion promissory be aware to Genesis may very well be “callable” within the occasion of liquidation, requiring DCG to pay the full worth of the be aware instantly.
Qureshi additionally mentioned DCG’s buy-out of Genesis’s “dangerous debt” in Three Arrows Capital (3AC), reported to be round $2.1 billion.
Nevertheless, Qureshi famous that:
“DCG doesn’t have $2.1B in money to pay the worth of the promissory be aware”
3/ It could additionally do two different issues:
+ considerably scale back DCG’s capacity to restrict legal responsibility from a Genesis chapter. a callable promissory be aware would principally be a “you break it, you purchase it” state of affairs
+ scale back Genesis’s urgency to file chapter as they “have the property”— Ryan Selkis 🥷 (@twobitidiot) December 11, 2022
Qureshi mentioned two potential eventualities within the occasion of Genesis going into liquidation.
The primary state of affairs is that “Genesis information [for bankruptcy] after which pulls DCG out of business,” coming into a fancy chapter process.
The second state of affairs is that “Genesis goes beneath, after which the be aware is itself auctioned off at a price lower than par,” however someway, DCG is prevented from going beneath.
Qureshi concluded by explaining that “it appears very, very doubtless” that genesis should file for chapter or undergo a restructuring the place collectors must agree to scale back claims at Genesis to keep away from chapter.
“The chapter could be so deleterious to collectors to Genesis”
Robert Leshner, founding father of Compound and creditor to Genesis, mentioned Genesis being pushed out of business involuntarily.
Leshner highlighted the potential penalties and implications of such a state of affairs and detailed his expectations of Genesis submitting for chapter:
“Any variety of collectors may push them out of business […] I feel the percentages are excessive, like 80 p.c”
