Haseeb Qureshi, the Managing Associate at Dragonfly Capital, mentioned the potential penalties of Genesis going into liquidation on a latest episode of Unchained’s “The Chopping Block.”
1/ On a latest episode of Unchained’s The Chopping Block, @hosseeb makes a shocking remark in regards to the $1.1 billion DCG-Genesis promissory observe.
He says the ten yr observe might have been structured as “callable” within the occasion of a Genesis liquidation.
Here is what that may imply:
— Ryan Selkis 🥷 (@twobitidiot) December 11, 2022
Mentioned on the Dec. 3 episode of Unchained’s ‘The Chopping Block,’ Qureshi mentioned:
“It seems like there was loads of humorous busy within the accounting at genesis very very excessive degree”
In accordance with Qureshi, the Digital Foreign money Group’s (DCG) $1.1 billion promissory observe to Genesis could possibly be “callable” within the occasion of liquidation, requiring DCG to pay the entire worth of the observe instantly.
Qureshi additionally mentioned DCG’s buy-out of Genesis’s “unhealthy 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 observe”
3/ It will additionally do two different issues:
+ considerably cut back DCG’s skill to restrict legal responsibility from a Genesis chapter. a callable promissory observe would mainly be a “you break it, you purchase it” state of affairs
+ cut 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 first situation is that “Genesis recordsdata [for bankruptcy] after which pulls DCG out of business,” coming into a fancy chapter process.
The second situation is that “Genesis goes beneath, after which the observe is itself auctioned off at a price lower than par,” however someway, DCG is prevented from going beneath.
Qureshi concluded by explaining that “it seems very, very doubtless” that genesis should file for chapter or undergo a restructuring the place collectors must agree to cut back claims at Genesis to keep away from chapter.
“The chapter can 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 situation and detailed his expectations of Genesis submitting for chapter:
“Any variety of collectors might push them out of business […] I believe the percentages are excessive, like 80 p.c”
