Digital Currency Group industry crisis
2023.01.20 03:34
Digital Currency Group industry crisis
By Kristina Sobol
Budrigannews.com – After Genesis, one of Digital Currency Group’s subsidiaries, froze customer withdrawals in November, DCG, a U.S. crypto company, is at the center of the industry’s most recent meltdown.
Investors are concerned that Genesis’s collapse could bring down other connected businesses and projects, despite the company’s claims that it is working to avoid bankruptcy.
The following is what we know about Digital Currency Group’s numerous businesses:
In 2016, DCG made an investment in CoinDesk, a cryptocurrency news website. At the time, TechCrunch estimated the deal to be worth between $500,000 and $600,000.
A leaked balance sheet from Alameda Research, the crypto trading company established by Sam Bankman-Fried, was made public by CoinDesk in November. The report was blamed by many industry observers for the collapse of Alameda and Bankman-Fried’s crypto exchange FTX, which went bankrupt less than two weeks later.
Genesis Trading was formerly the bitcoin trading division of DCG Chief Executive Barry Silbert’s SecondMarket, but when Silbert started the venture firm in 2015, it relaunched under its new name as a subsidiary of DCG.
Genesis Global Capital, the crypto lending arm of Genesis, announced in November that it would no longer make new loans and would prevent customers from withdrawing funds. Genesis cited the market disruption brought about by FTX’s collapse as the reason for this decision.
In order to provide a crypto lending service, Genesis Global Capital had collaborated with a number of other cryptocurrency businesses, including the cryptocurrency exchange Gemini. Gemini claims that Genesis owes $900 million to its customers.
According to a person with knowledge of the situation, Genesis owes its creditors, including Gemini, more than $3 billion.
According to a letter that Silbert sent to shareholders in November, DCG owes Genesis’ crypto lending arm $1.675 billion. That includes a promissory note for $1.1 billion that appears to be linked to Genesis’ liabilities that DCG assumed after Genesis was severely impacted by the collapse of Singapore-based crypto hedge fund Three Arrows Capital.
After Silbert resigned as CEO of SecondMarket in 2013, he established Grayscale Investments. He started DCG in 2015, with Grayscale as one of the company’s subsidiaries, after he sold SecondMarket to Nasdaq Inc.
The largest bitcoin fund in the world is Grayscale’s flagship Grayscale Trust (GBTC), which the company hopes will one day become an exchange-traded fund.
Since the beginning of 2021, GBTC has not traded at a premium to the price of bitcoin, its underlying asset. In 2021, DCG announced its intention to spend up to $1 billion on the acquisition of GBTC shares in an effort to reduce the discount.
DCG and its subsidiaries were unaffected by problems at Genesis’ lending business, DCG stated in November, while Grayscale stated that its underlying assets were unaffected.
On its website, DCG lists more than 160 companies in its portfolio, 28 of which it has acquired, indicating that it is a prolific venture capital investor. Foundry, a crypto mining and staking company, and the cryptocurrency exchange Luno are listed as subsidiaries.
Additionally, DCG is a shareholder in the cryptocurrency exchange Coinbase (NASDAQ:) in the United States. and Kraken’s other holdings include Circle, a US company that manages USDC, Chainalysis, Dune Analytics, Elliptic, and Etherscan, as well as blockchain analytics firms.
