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Business

Crypto lender Genesis preparing to file for bankruptcy, Bloomberg News reports

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Jan 18 (Reuters) – Cryptocurrency lender Genesis Global Capital is planning to file for bankruptcy as soon as this week, Bloomberg News reported on Wednesday, citing people with knowledge of the situation.

A bankruptcy filing has been expected for weeks, after the company froze customer redemptions on Nov. 16 following the downfall of major cryptocurrency exchange FTX.

The collapse of FTX in November has claimed several victims including crypto lender BlockFi and Core Scientific Inc , one of the biggest publicly traded crypto mining companies in the United States, both of which filed for bankruptcy protection in the following months.

Genesis, its parent Digital Currency Group and creditors have exchanged several proposals, but have so far failed to come to an agreement, the Bloomberg report said, adding that Kirkland & Ellis and Proskauer Rose have been advising groups of creditors.

Genesis did not immediately respond to a Reuters request for comment.

Genesis is also locked in a dispute with Gemini, founded by the identical twin crypto pioneers Cameron and Tyler Winklevoss.

Gemini offered a crypto lending product called Earn in partnership with Genesis, and now says Genesis owes it $900 million in connection with that product.

The U.S. Securities and Exchange Commission last week said it had charged Genesis and Gemini with illegally selling securities to hundreds of thousands of investors through their crypto lending program.

Reporting by Niket Nishant and Mehnaz Yasmin in Bengaluru; Editing by Sriraj Kalluvila

Our Standards: The Thomson Reuters Trust Principles.

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World

Davos 2023: Recession casts long shadow over opening of WEF summit

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DAVOS, Switzerland, Jan 16 (Reuters) – The prospect of imminent global recession cast a long shadow over Davos on Monday as participants gathering for the opening of the World Economic Forum’s annual meeting counted the likely cost for their economies and businesses.

Two-thirds of private and public sector chief economists surveyed by the WEF expect a global recession this year, with some 18% considering it “extremely likely” – more than twice as many as in the previous survey conducted in September 2022.

“The current high inflation, low growth, high debt and high fragmentation environment reduces incentives for the investments needed to get back to growth and raise living standards for the world’s most vulnerable,” WEF Managing Director Saadia Zahidi said in a statement accompanying the survey results.

The WEF’s survey was based on 22 responses from a group of senior economists drawn from international agencies including the International Monetary Fund, investment banks, multinationals and reinsurance groups.

Meanwhile, a survey of CEO attitudes by PwC released in Davos on Monday was the gloomiest since the “Big Four” auditor launched the poll a decade ago, marking a significant shift from optimistic outlooks in 2021 and 2022.

The World Bank last week slashed its 2023 growth forecasts to levels close to recession for many countries as the impact of central bank rate hikes intensifies, Russia’s war in Ukraine continues, and the world’s major economic engines sputter.

Definitions of what constitutes recession differ around the world but generally include the prospect of shrinking economies, possibly with high inflation in a “stagflation” scenario.

On inflation, the WEF survey saw large regional variations: the proportion expecting high inflation in 2023 ranged from just 5% for China to 57% for Europe, where the impact of last year’s rise in energy prices has spread to the wider economy.

A majority of the economists see further monetary policy tightening in Europe and the United States (59% and 55%, respectively), with policy-makers caught between the risks of tightening too much or too little.

“It is clear that there is a massive drop in demand, inventories are not clearing up, the orders are not coming through,” Yuvraj Narayan, deputy chief executive and chief financial officer of Dubai-based global logistics company DP World told Reuters.

“There are far too many constraints imposed. It is no longer a free-flowing global economy and unless they find the right solutions it will only get worse,” he said, adding the group expects freight rates to drop by between 15% and 20% in 2023.

AVOIDING LAY-OFFS

Few sectors expect to be totally immune.

Matthew Prince, chief executive of cloud services company Cloudflare Inc (NET.N), said internet activity was pointing to an economic slowdown.

“Since New Year’s, when I catch up with other tech company CEOs, they’re like, ‘have you noticed the sky is falling?'” he told Reuters.

PwC’s survey found confidence among companies in their growth prospects dropped the most since the 2007-08 global financial crisis, although a majority of CEOs had no plans to cut the size of their workforce in the next 12 months or to slash remuneration as they try to retain talent.

“They’re trying to do cost reduction without human capital changes and large layoffs,” said PwC global chairman Bob Moritz.

Jenni Hibbert, a partner at Heidrick & Struggles in London, said activity was normalising and the executive search firm was seeing “a little less flow” after two years of strong growth.

“We are hearing the same mixed picture from most of our clients. People expect a market that’s going to be more challenged,” Hibbert told Reuters.

AID CUTS

Nowhere is the real-world impact of recession more tangible than in efforts to tackle global poverty.

Peter Sands, executive director of the Global Fund to fight AIDS, Tuberculosis and Malaria, said overseas development aid was being cut in budgets as donors started to feel the pinch, while recession would hit local health provision hard.

A common concern among many Davos participants was the sheer level of uncertainty for the year ahead – from the duration and intensity of the Ukraine war through to the next moves of top central banks looking to lower inflation with deep rate hikes.

The chief financial officer of one U.S. publicly traded company told Reuters he was preparing widely-varying scenarios for 2023 in light of economic uncertainty – in large part related to how interest rates will trend this year.

While there were few silver linings on the horizon, some noted that an all-out recession could give pause to the policy-tightening plans of the U.S. Federal Reserve and other major central banks that is making borrowing increasingly dear.

“I want the outlook to become a little weaker so that the Fed rates start going down and that whole sucking-out of liquidity by global central banks eases,” Sumant Sinha, chairman and CEO of Indian clean energy group ReNew Power, told Reuters.

“That will benefit not just India but globally,” he said, adding the current round of rate hikes was making it dearer for clean energy companies to fund their capital-intensive projects.

Reporting by Mark John, Maha El Dahan, Jeffrey Daskins, Leela de Kretser, Divya Chowdhury and Paritosh Bansal; Editing by Alexander Smith

Our Standards: The Thomson Reuters Trust Principles.

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Business

China acquires ‘golden shares’ in two Alibaba units

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BEIJING, China, Jan 13 (Reuters) – China has acquired minority stakes with special rights in two domestic units of tech giant Alibaba Group Holding Ltd (9988.HK), business registration records showed, as Beijing extends a campaign to strengthen control over online content.

Beijing has been taking ‘golden shares’ in private online media and content companies for more than five years, and in recent years expanding such arrangements to companies with vast troves of data.

The stakes taken over the last four months in the Alibaba units are the first ones to come to light for the e-commerce firm. Alibaba has been one of the most prominent targets of China’s two-year-long regulatory crackdown on tech giants.

These golden shares, typically equal to about 1% of a firm, are bought by government-backed funds or companies which gain board representation and/or veto rights for key business decisions.

Public business registration records showed that in September last year an investment vehicle of state-owned Zhejiang Media Group took a 1% stake in Alibaba’s Youku Film and Television unit, which is based in Shanghai.

Zhejiang Media Group has also appointed Jin Jun, the general manager of one of its subsidiaries, to the board of the Alibaba unit, the records showed.

[1/3] The logo of Alibaba Group is seen at its office in Beijing, China Jan. 5, 2021. REUTERS/Thomas Peter

Separate business registration records showed that in December WangTouSuiCheng (Beijing), an entity under the China Internet Investment Fund (CIIF) set up by the Cyberspace Administration of China (CAC), acquired a 1% stake in Alibaba unit Guangzhou Lujiao, whose main focus is “research and experimentation”.

The Financial Times, which first reported the WangTouSuiCheng investment on Friday, said the goal of the investment is for Beijing to tighten control over content at the e-commerce giant’s streaming video unit Youku and web browser UCWeb.

Alibaba didn’t respond to a request to comment.

The FT also reported, citing unidentified sources, that discussions was under way for the government to take golden shares in gaming giant Tencent Holdings (0700.HK) which would involve a stake in one of the group’s main subsidiaries. Tencent declined to comment.

Other firms that have such golden share arrangements include Full Truck Alliance Co (YMM.N), as well as mainland subsidiaries of TikTok owner ByteDance, Kuaishou Technology (1024.HK) and Weibo , Reuters previously reported.

Having such golden shares can be helpful to firms when they try to secure licences to disseminate online news and to show online visual and audio programmes, sources have told Reuters.

Reporting by Yingzhi Yang, Brenda Goh and Josh Horwitz; Additional reporting by Rishabh Jaiswal and Mrinmay Dey; Editing by Uttaresh.V, Rashmi Aich and Kenneth Maxwell

Our Standards: The Thomson Reuters Trust Principles.

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Business

Microsoft in talks to invest $10 bln in ChatGPT owner -Semafor

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Jan 9 (Reuters) – Microsoft Corp (MSFT.O) is in talks to invest $10 billion into OpenAI, the owner of ChatGPT, which will value the San Francisco-based firm at $29 billion, Semafor reported on Monday, citing people familiar with the matter.

The funding includes other venture firms and deal documents were sent to prospective investors in recent weeks, with the aim to close the round by the end of 2022, the report said.

Microsoft declined to comment, while OpenAI did not immediately respond to Reuters’ request for comment.

This follows a Wall Street Journal report that said OpenAI was in talks to sell existing shares at a roughly $29 billion valuation, with venture capital firms such as Thrive Capital and Founders Fund buying shares from existing shareholders.

OpenAI, founded by Tesla Inc (TSLA.O) CEO Elon Musk and investor Sam Altman, made the ChatGPT chatbot available for free public testing on Nov. 30. A chatbot is a software application designed to mimic human-like conversation based on user prompts.

The Semafor report said the funding terms included Microsoft getting 75% of OpenAI’s profits until it recoups its initial investment once OpenAI figures out how to make money on ChatGPT and other products like image creation tool Dall-E.

On hitting that threshold, Microsoft would have a 49% stake in OpenAI, with other investors taking another 49% and OpenAI’s nonprofit parent getting 2%, the report said, without clarifying what the stakes would be until Microsoft got its money back.

Microsoft, which invested $1 billion in OpenAI in 2019, was working to launch a version of its search engine Bing using the AI behind ChatGPT, the Information reported last week.

Reporting by Aarati Krishna in Bengaluru; Editing by Savio D’Souza

Our Standards: The Thomson Reuters Trust Principles.

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Business

Startups spring from ashes of Big Tech purge

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  • Mass tech layoffs spawn new wave of startups
  • Early-stage VC funding at around record levels
  • Echoes of dotcom crash that fueled Facebook, others

Jan 3 (Reuters) – Nic Szerman lost his job at Meta Platforms (META.O) in November, just two months after joining full-time, falling victim to a sweeping 13% reduction of its workforce as the advertising market cratered.

Days later he was back working, seeking investment for his own company Nulink, a blockchain-based payment company, and sent pitches to startup accelerator Y Combinator and Andreessen Horowitz’s cryptocurrency fund.

“As counterintuitive as it may sound, this layoff left me in a really good position,” the 24-year-old said. “Because I don’t have to pay back the sign-on bonus, I get four months of pay, and now I have time to focus on my own project.”

Szerman is part of a wave of would-be entrepreneurs who are emerging from the ashes of the mass job losses seen in Silicon Valley in the second half of 2022, according to venture capitalists.

U.S. tech giants including Meta, Microsoft (MSFT.O), Twitter and Snap (SNAP.N) have purged more than 150,000 staff, according to Layoff.fyi, which tracks technology job losses.

While overall venture capital (VC) financing fell 33% globally to about $483 billion in 2022, early-stage funding was robust, with $37.4 billion raised in so-called angel or seed rounds, in line with the record level seen in 2021, according to data from research firm PitchBook.

Day One Ventures, an early stage venture fund in San Francisco, launched a new initiative in November to fund startups founded by people who had been laid off from their tech jobs, touting the slogan “Funded, not Fired”.

The program aims to cut 20 checks for $100,000 by the end of 2022. Day One said it had received over 1,000 applications, most of them from people who were cut loose by Meta, Stripe and Twitter.

“We’re investing $2 million in 20 companies – if we just find one unicorn it almost returns the fund, which I think is a really unique opportunity for us as fund managers,” said Masha Bucher, co-founder at Day One Ventures.

“Looking at the last economic cycle, companies like Stripe, Airbnb, Dropbox have been created in crisis.”

HOT: GAMING AND AI

Also in November, multi-stage fund Index Ventures, which has bankrolled Facebook, Etsy and Skype, launched its second Origins fund, which will invest $300 million in early-stage startups.

Silicon Valley investor U.S. Venture Partners and Austrian VC firm Speedinvest have meanwhile earmarked a similar amount for newly founded companies.

Investors highlighted gaming and artificial intelligence among hot areas of interest.

“With advances in game design, new innovations like cloud gaming, and the emergence of social networking in this sphere, gaming has really transcended into mainstream culture,” said Sofia Dolfe, partner at Index Ventures.

“In every period of economic uncertainty, there is opportunity – to reset, re-prioritize and re-focus energy and resources.”

DOTCOM BUBBLE 2.0

Szerman said his project was rejected by Y Combinator, while he hasn’t heard back from Andreessen Horowitz yet, though he added that other early-stage venture capitalists had expressed interest.

“I told the investors we’ll chat in two or three months,” he added. “I’ll focus on scaling the system now.”

Some investors compared the 2022 downturn to the dotcom crash of the early 2000s, when dozens of overvalued startups went bust, flooding the market with talent and helping to spark a wave of new companies such as Facebook and YouTube.

“Many great companies have been created in relatively dark times,” said Harry Nelis, partner at investment firm Accel, who sees a new generation of risk takers emerge among the swathe of people left unemployed.

Some industry players say former Big Tech employees are uniquely placed to start their own companies, having seen first-hand how some of the biggest firms in the world operate, and enjoying ongoing access to their network of highly skilled colleagues.

One former Googler has sought to help others like him looking for life after technology giants. In 2015, Christopher Fong, who spent almost a decade working for the tech titan in California, launched Xoogler, a project designed to help former employees hoping to start their own companies. Since then, the group’s membership has since swelled to more than 11,000.

Fong told Reuters that experience in Big Tech firm gave founders a “strong brand that can be leveraged to meet investors, potential customers, and recruit team members”.

(This story has been refiled to correct Harry Nelis’ designation to partner from managing partner in paragraph 19)

Reporting by Martin Coulter in London, Supantha Mukherjee in Stockholm and Krystal Hu in New York; Editing by Pravin Char

Our Standards: The Thomson Reuters Trust Principles.

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Business

Microsoft to buy 4% stake in London Stock Exchange

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Dec 12 (Reuters) – Microsoft (MSFT.O) is to take a 4% equity stake in London Stock Exchange Group (LSEG.L) as part of a 10-year commercial deal to migrate the exchange operator’s data platform into the cloud, the British company said on Monday.

It is the latest sign of deepening ties between financial services providers and a handful of big global cloud companies such as Microsoft, Google (GOOGL.O), Amazon (AMZN.O) and IBM (IBM.N), which have prompted regulators to scrutinise the ties more closely.

Microsoft has longstanding links with LSEG, but the exchange group’s Chief Executive David Schwimmer said that about a year ago they began talks on closer ties.

“It’s a long term partnership. In terms of the products we will be building together, I would expect our customers to start to see the benefits of that 18 to 24 months out and we will continue building from there,” Schwimmer told Reuters.

Regulators have expressed concern about the over-reliance of financial firms on too few cloud providers, given the disruption this could cause across the sector if a provider went down.

The European Union has just approved a law introducing safeguards on cloud providers in financial services, with Britain set to follow suit.

“You should assume we do not like to surprise our regulators,” Schwimmer said, when asked if LSEG has ensured that regulators were on board.

LSEG said the link with Microsoft was a partnership to reap the benefits of “consumption-based pricing”, and not a traditional cloud deal.

“We will continue to maintain our multi-cloud strategy and working with other cloud providers,” Schwimmer said.

The deal was not about savings by outsourcing activities to the cloud, but about meaningful incremental revenue growth as new products come on stream over time.

“This feels like a key milestone in LSEG’s journey towards being information solutions-centric, even if ‘meaningful’ revenue growth specifics are lacking,” analysts at Jefferies said.

As part of the deal, LSEG has made a contractual commitment for minimum cloud-related spend with Microsoft of $2.8 billion over the term of the partnership.

Microsoft said the basis of the partnership will be the digital transformation of LSEG’s technology infrastructure and Refinitiv platforms on to the Microsoft Cloud.

“The initial focus will be on delivering interoperability between LSEG Workspace and Microsoft Teams, Excel and PowerPoint with other Microsoft applications and a new version of LSEG’s Workspace,” the U.S. company said.

LSEG shares were up 4% in early trade.

LSEG bought Refinitiv for $27 billion from a Blackstone and Thomson Reuters’ consortium, which turned the exchange into the second largest financial data company after Bloomberg LP.

LSEG has made “good progress” on its programme for the delivery of its cloud-based data platform since the completion of its Refinitiv acquisition in January 2021, it said in a statement.

Microsoft will buy LSEG shares from the Blackstone (BX.N)/Thomson Reuters (TRI.TO), Consortium, the exchange operator said.

Thomson Reuters, which owns Reuters News, has a minority shareholding in LSEG following the Refinitiv deal.

Microsoft’s purchase is expected to complete in the first quarter of 2023.

Reporting by Yadarisa Shabong in Bengaluru; Editing by Nivedita Bhattacharjee, Jane Merriman and Louise Heavens

Our Standards: The Thomson Reuters Trust Principles.

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Business

Crypto exchange Gemini trying to recover $900 million from crypto lender Genesis, Financial Times reports

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Dec 3 (Reuters) – Crypto broker Genesis and its parent company Digital Currency Group (DCG) owe customers of the Winklevoss twins’ crypto exchange Gemini $900 million, the Financial Times reported on Saturday.

Crypto exchange Gemini is trying to recover the funds after Genesis was wrongfooted by last month’s failure of Sam Bankman-Fried’s FTX crypto group, the newspaper said, citing people familiar with the matter.

Venture capital company Digital Currency Group, which owns Genesis Trading and cryptocurrency asset manager Grayscale, owes $575 million to Genesis’ crypto lending arm, Digital Currency Chief Executive Barry Silbert told shareholders last month.

Gemini, which runs a crypto lending product in partnership with Genesis, has now formed a creditors’ committee to recoup the funds from Genesis and its parent DCG, the report added.

Genesis and Gemini did not immediately respond to Reuters’ request for comment.

Genesis has hired investment bank Moelis & Company to explore options including a potential bankruptcy, the New York Times reported last month, citing three people familiar with the matter.

Genesis Global Capital suspended customer redemptions in its lending business last month, citing the sudden failure of crypto exchange FTX.

Crypto trading platform FTX filed for bankruptcy protection in the United States on Nov. 11 in the highest-profile crypto blowup to date, after traders pulled billions from the platform in three days and rival exchange Binance abandoned a rescue deal.

Reporting by Shubhendu Deshmukh and Rhea Binoy in Bengaluru; Editing by Toby Chopra and Christina Fincher

Our Standards: The Thomson Reuters Trust Principles.

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Business

Blackstone’s $69 bln REIT curbs redemptions in blow to property empire

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NEW YORK, Dec 1 (Reuters) – Blackstone Inc (BX.N) limited withdrawals from its $69 billion unlisted real estate income trust (REIT) on Thursday after a surge in redemption requests, an unprecedented blow to a franchise that helped it turn into an asset management behemoth.

The curbs came because redemptions hit pre-set limits, rather than Blackstone setting the limits on the day. Nonetheless, they fueled investor concerns about the future of the REIT, which makes up about 17% of Blackstone’s earnings. Blackstone shares ended trading down 7.1% on the news.

Many investors in the REIT are concerned that Blackstone has been slow to adjust the vehicle’s valuation to that of publicly traded REITs that have taken a hit amid rising interest rates, a source close to the fund said. Rising interest rates weigh on real estate values because they make financing properties more expensive.

Blackstone has reported a 9.3% year-to-date return for its REIT, net of fees, a contrast to the publicly traded Dow Jones U.S. Select REIT Total Return Index (.DWRTFT) 22.19% decline over the same period.

That outperformance has some investors questioning how Blackstone comes up with the valuation of its REIT, said Alex Snyder, a portfolio manager at CenterSquare Investment Management LLC in Philadelphia.

“People are taking profits at the value Blackstone says their REIT shares are at,” said Snyder.

A Blackstone spokesperson declined to comment on how the New York-based firm calculates the valuation of its REIT, but said its portfolio was concentrated in rental housing and logistics in the southern and western United States that have short duration leases and rents outpacing inflation.

The spokesperson added that the REIT relied on a long-term fixed rate debt structure, making it resilient.

“Our business is built on performance, not fund flows, and performance is rock solid,” the spokesperson said.

The REIT is marketed to wealthy individual investors. Two sources familiar with the matter said turmoil in Asian markets, fueled by concerns about China’s economic prospects and political stability, contributed to the redemptions. The majority of investors redeeming were from Asia and needed the liquidity, they said.

Blackstone told investors in a letter it would curb withdrawals from its REIT after it received redemption requests in November greater than 2% of its monthly net asset value and 5% of its quarterly net asset value. As a result, the REIT allowed investors in November to redeem $1.3 billion, equivalent to approximately 43% of investors’ repurchase requests.

Some analysts said Blackstone’s REIT runs the risk of getting caught in a spiral of selling assets to meet redemptions if it cannot regain the trust of its investors. On Thursday, the firm said the REIT had agreed to sell its 49.9% interest in two Las Vegas casinos for $1.27 billion.

“The impact on Blackstone depends on whether the REIT is able to stabilize its net asset value over time, or is forced to enter an extended run-off scenario, with significant asset sales and ongoing redemption backlog — too early to tell, in our view,” BMO Capital Markets analysts wrote in a note.

BLOW TO BLACKSTONE’S PLANS

The REIT turmoil is a setback for two of Blackstone’s strategies that helped it become the world’s biggest alternative asset manager with $951 billion in assets: real estate investing and attracting high net-worth individuals.

Blackstone launched the REIT in 2017, piggybacking off the success of its real estate empire, which had by then outgrown its private equity business. Its president Jonathan Gray was elevated and made successor to Chief Executive Stephen Schwarzman as a result of his success in property investing.

The REIT also represented a bid to win over high net-worth investors clamoring for private market products, which they believe perform better than those that are publicly traded.

Blackstone has been seeking to diversify its investor base after tapping institutional investors, such as public pension funds, insurance firms and sovereign wealth funds, for its products for decades.

Blackstone managed a total of $236 billion of wealth held by individuals as of the end of September, up 43% year-on-year.

Credit Suisse analysts wrote in a note that they expected the REIT’s woes to weigh on Blackstone’s fee-related earnings and assets under management. “These all will continue put pressure on Blackstone’s premium valuation,” they wrote.

On Blackstone’s third-quarter earnings call in October, Gray blamed REIT redemptions on market volatility, which he said had driven away individual investors from active equity and fixed income funds.

He added that the REIT had ample cash reserves to “weather pretty much any storm.” These cash reserves totaled $2.7 billion as of the end of October, according to its prospectus.

“It’s not a surprise that you would see a deceleration in flows from individual investors when you’ve had this kind of market decline,” Gray said.

Reporting by Chibuike Oguh and Herb Lash in New York; Editing by Rosalba O’Brien and Sam Holmes

Our Standards: The Thomson Reuters Trust Principles.

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Business

Crypto lender BlockFi files for bankruptcy, cites FTX exposure

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  • Filing follows weeks after FTX collapse
  • FTX listed as BlockFi’s No.2 creditor
  • Bitcoin down over 70% from 2021 peak

Nov 28 (Reuters) – Cryptocurrency lender BlockFi has filed for Chapter 11 bankruptcy protection, it said on Monday, the latest crypto casualty after the firm was hurt by exposure to the spectacular collapse of the FTX exchange earlier this month.

The filing in a New Jersey court comes as crypto prices have plummeted. The price of bitcoin , the most popular digital currency by far, is down more than 70% from a 2021 peak.

“BlockFi’s Chapter 11 restructuring underscores significant asset contagion risks associated with the crypto ecosystem,” said Monsur Hussain, senior director at Fitch Ratings.

New Jersey-based BlockFi, founded by fintech executive-turned-crypto entrepreneur Zac Prince, said in a bankruptcy filing that its substantial exposure to FTX created a liquidity crisis. FTX, founded by Sam Bankman-Fried, filed for protection in the United States earlier in November after traders pulled $6 billion from the platform in three days and rival exchange Binance abandoned a rescue deal.

“Although the debtors’ exposure to FTX is a major cause of this bankruptcy filing, the debtors do not face the myriad issues apparently facing FTX,” said the first day bankruptcty filing by Mark Renzi, managing director at Berkeley Research Group, the proposed financial advisor for BlockFi. “Quite the opposite.”

BlockFi said the liquidity crisis was due to its exposure to FTX via loans to Alameda, a crypto trading firm affiliated with FTX, as well as cryptocurrencies held on FTX’s platform that became trapped there. BlockFi listed its assets and liabilities as being between $1 billion and $10 billion.

Renzi said that BlockFi had sold a portion of its crypto assets earlier in November to fund its bankruptcy. Those sales raised $238.6 million in cash, and BlockFi now has $256.5 million in cash on hand.

In a court filing on Monday, BlockFi listed FTX as its second-largest creditor, with $275 million owed on a loan extended earlier this year. It said it owes money to more than 100,000 creditors. The company also said in a separate filing it plans to lay off two-thirds of its 292 employees.

Under a deal signed with FTX in July BlockFi was to receive a $400 million revolving credit facility while FTX got an option to buy it for up to $240 million.

BlockFi’s bankruptcy filing also comes after two of BlockFi’s largest competitors, Celsius Network and Voyager Digital , filed for bankruptcy in July citing extreme market conditions that had resulted in losses at both companies.

Crypto lenders, the de facto banks of the crypto world, boomed during the pandemic, attracting retail customers with double-digit rates in return for their cryptocurrency deposits.

Crypto lenders are not required to hold capital or liquidity buffers like traditional lenders and some found themselves exposed when a shortage of collateral forced them – and their customers – to shoulder large losses.

BlockFi’s first bankruptcy hearing is scheduled to take place on Tuesday FTX did not respond to a request for comment.

CREDITOR LIST

BlockFi’s largest creditor is Ankura Trust, a company that represents creditors in stressed situations, and is owed $729 million. Valar Ventures, a Peter Thiel-linked venture capital fund, owns 19% of BlockFi equity shares.

BlockFi also listed the U.S. Securities and Exchange Commission as one of its largest creditors, with a $30 million claim. In February, a subsidiary of BlockFi agreed to pay $100 million to the SEC and 32 states to settle charges in connection with a retail crypto lending product the company offered to nearly 600,000 investors.

Bain Capital Ventures and Tiger Global co-led BlockFi’s March 2021 funding round, according to a press release issued by BlockFi at the time. Both firms did not immediately respond to a request for comment.

In a blog post, BlockFi said its Chapter 11 cases will enable the company to stabilize its business and maximize value for all stakeholders.

“Acting in the best interest of our clients is our top priority and continues to guide our path forward,” BlockFi said.

In its bankruptcy filing, BlockFi said it had hired Kirkland & Ellis and Haynes & Boone as bankruptcy counsel.

BlockFi had earlier paused withdrawals from its platform.

In a filing, Renzi said that Blockfi intends to seek authority to honor client withdrawal requests from its customer wallet accounts, in which crypto assets are held in custody. However, the company did not disclose its plans for how it might treat withdrawal requests from its other products, including its interest-bearing accounts.

“BlockFi clients may ultimately recover a substantial portion of their investments,” Renzi said in the filing.

ORIGINS

BlockFi was founded in 2017 by Prince, who is currently the company’s chief executive officer, and Flori Marquez. Though headquartered in Jersey City, BlockFi also has offices in New York, Singapore, Poland and Argentina, according to its website.

In July, Prince had tweeted that “it’s time to stop putting

BlockFi in the same bucket / sentence as Voyager and Celsius.”

“Two months ago we looked the ‘same.’ They shut down and have impending losses for their clients,” he said.

According to a profile of BlockFi published earlier this year by Inc, Prince was raised in San Antonio, Texas, and financed his college education at the University of Oklahoma and Texas State University with winnings from online poker tournaments. Before starting BlockFi with Marquez, he held jobs at Orchard Platform, a broker dealer, and at Zibby, a lease-to-own lender now called Katapult (KPLT.O).

Marquez previously worked at Bond Street, a small business lending outfit that was folded in to Goldman Sachs (GS.N) in 2017, according to Inc.

Reporting by Hannah Lang in Washington, Niket Nishant and Manya Saini in Bengaluru and Elizabeth Howcroft in London
Additional reporting by Dietrich Knauth, Editing by Megan Davies, Conor Humphries, Matthew Lewis and Anna Driver

Our Standards: The Thomson Reuters Trust Principles.

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Business

Crypto lender Genesis says no immediate plans to file for bankruptcy

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Nov 21 (Reuters) – Cryptocurrency lender Genesis said on Monday it has no immediate plans to file for bankruptcy, days after the collapse of crypto exchange FTX forced it to suspend customer redemptions.

“We have no plans to file bankruptcy imminently. Our goal is to resolve the current situation consensually without the need for any bankruptcy filing,” a Genesis spokesperson said in an emailed statement to Reuters, adding that it continues to have conversations with creditors.

A report from Bloomberg News, citing sources, said Genesis was struggling to raise fresh cash for its lending unit, and warning investors it may need to file for bankruptcy if it does not find funding.

Also, the Wall Street Journal reported, citing sources that the company approached crypto exchange Binance seeking an investment but Binance decided against it, fearing a conflict of interest down the line.

Genesis also approached private equity firm Apollo Global Management (APO.N) for capital assistance, according to the report.

Apollo did not immediately respond to a Reuters request for comment on the WSJ report, while Binance declined to comment.

Last week, Genesis Global Capital suspended customer redemptions in its lending business, citing the sudden failure of Sam Bankman-Fried’s crypto exchange FTX.

Crypto exchange Gemini, which runs a crypto lending product in partnership with Genesis, tweeted on Monday that it was continuing to work with the company to enable its users to redeem funds from its yield-generating “Earn” programme.

In a statement on its blog last week, Gemini said there was no impact on its other products and services after Genesis paused withdrawals.

On Thursday, the Wall Street Journal reported that Genesis had sought an emergency loan of $1 billion from investors before it suspended withdrawals.

Earlier this month, FTX filed for U.S. bankruptcy protection in the highest-profile crypto blowup to date, after traders pulled billions from the platform in three days and rival exchange Binance abandoned a rescue deal.

Reporting by Manya Saini and Lavanya Sushil Ahire in Bengaluru; Additional reporting by Rishabh Jaiswal; Editing by Sriraj Kalluvila, Rashmi Aich and Sam Holmes

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