As the crypto market continues to evolve and mature, one of the industry’s major players, Digital Currency Group (DCG), is facing a significant financial crisis.
According to sources familiar with the matter, DCG’s subsidiary crypto broker Genesis owes creditors over $3 billion, leading the company to consider selling off assets in its extensive venture portfolio to raise funds.
Digital Currency Group‘s Genesis Owes Billions
DCG, a conglomerate that controls crypto media outlet CoinDesk and investment manager Grayscale, is seeking to secure fresh cash after its Genesis unit was caught off guard in November by the collapse of crypto exchange FTX.
The company is now exploring the potential sale of parts of its venture capital holdings, which include over 200 crypto-related projects such as exchanges, banks, and custodians in at least 35 countries, and is valued at around $500 million.
The magnitude of Genesis’s debt to creditors highlights the difficult task ahead for DCG, as the company’s search for outside funding has so far failed to garner interest. The situation is further complicated by a high-profile dispute with the Winklevoss twins, whose crypto exchange Gemini used Genesis in its lending program.
Recently, Cameron Winklevoss, co-founder of Gemini, called for DCG’s CEO Barry Silbert to be removed, calling him “unfit” to lead the company. Silbert, however, has defended the company’s actions and efforts to recover in the wake of the crypto industry’s challenges.
Genesis, a wholly-owned subsidiary of DCG, was one of the largest lenders in the crypto market, allowing customers to lend out their coins in return for high yields. However, the company halted customer withdrawals in November following the collapse of FTX, citing “unprecedented market turmoil.”
In an effort to address the situation, Genesis has hired investment bank Moelis to explore its options, but talks for outside funding have yet to materialize. DCG CEO Barry Silbert recently informed shareholders that the company has cut 30% of the workforce at Genesis and shut down its wealth management business to reduce costs.
The situation has affected retail customers caught in the middle, and raises questions about the stability and sustainability of the crypto lending market. As DCG continues to explore its options and search for funding, the future of its venture portfolio and its ability to pay off its creditors remains uncertain.
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