CEO of DCG addressed investors with disappointing letter

01/11/2023

2 minutes read

2023.01.11 11:02

By Ray Johnson

Budrigannews.com – After an error occurred in the Digital Currency Group (DCG) chief’s letter to shareholders, the crypto community awoke to yet another day of drama. On January 10, DCG CEO Barry Silbert wrote a letter to shareholders about the state of the cryptocurrency market and the growing fear, uncertainty, and doubt (FUD) surrounding the business. Genesis Global Capital, a crypto lending firm, and Grayscale, the world’s leading crypto asset manager, are both subsidiaries of DCG.

Due to the bear market and FTX contagion, Silbert addressed the growing concerns regarding DCG and its subsidiaries in the letter. He claimed that the industry had been ravaged by bad actors and the collapse of major crypto companies. “DCG and many of our portfolio companies are not immune to the effects of the current turmoil,” he stated.

I’m incredibly proud of the role that DCG & I have played as pioneers & builders over the past decade. We’ve invested in >200 companies that have developed & shaped the industry, we’ve helped build the first publicly-quoted BTC fund, the largest asset manager in the space..(2/10)

— Barry Silbert (@BarrySilbert) January 10, 2023

Silbert asked some burning questions about DCG’s relationship with FTX, the loan agreement with Genesis, and more in the second half of the letter. He stated that Genesis had invested $250,000 in FTX’s Series B funding round in July 2021 and had a “trading and lending relationship” with Three Arrows Capital.

In addition, DCG borrowed $500 million from Genesis between January and May 2022 at interest rates ranging from 10% to 12%. It currently owes Genesis $447.5 million and 4,550 Bitcoin (BTC) worth $78 million, both of which will expire in May 2023.

However, the fact that Silbert chose not to respond to Cameron Winklevoss’s accusations, which came just hours before his letter, was even more perplexing to the crypto community. On January 10, Winklevoss wrote an open letter to DCG’s board, claiming that CEO Barry Silbert was “unfit” to run the business. Additionally, he said that Silbert hid behind lawyers and defrauded customers. Gemini is said to owe Genesis $900 million.

A user of Twitter wrote that the letter suggests that individuals might not receive their money back. Another user wrote in opposition to Silbert’s strategy of purchasing GBTC shares by selling borrowed BTC:

“So you borrowed Bitcoins, sold them, and bought GBTC shares? Not sure how you “hedge” GBTC long positions with Bitcoins otherwise.”

Other members of the crypto community characterized the letter as a “PR tactic” and accused Silbert of evading the allegations.

Laymen terms! I’m Rekt and can’t pay @cameron @tyler @Gemini but I did some neat things along the way! https://t.co/8ZzrE5KIyZ

— KingKong (@KingKon43801491) January 10, 2023

Others speculated that the letter offered a hint that Silbert might lose his job in the coming weeks, while others went on to compare his strategies to those of Terraform Labs co-founder Do Kwon.