Jan 12 (Reuters) – U.S. crypto firm Digital Currency Group (DCG) is at the center of the latest industry meltdown after one of its companies, Genesis, froze customer withdrawals in November.
Genesis said it is working to prevent a bankruptcybut investors fear that its collapse could bring down other connected companies and projects.
Here’s what we know about the many companies that Digital Currency Group owns:
DCG acquired crypto news website CoinDesk in 2016 after previously investing in the medium. TechCrunch at the time fixed the deal as worth around $500,000 to $600,000.
CoinDesk in November published a leaked balance sheet from Alameda Research, the crypto trading firm founded by Sam Bankman-fried. Many industry watchers cited the report as the catalyst for the downfall of Alameda and Bankman-Fried crypto exchange FTX, which filed for bankruptcy less than two weeks later.
Genesis Trading was originally the bitcoin trading arm at DCG CEO Barry Silbert’s SecondMarket, but it was relaunched under its new name as a subsidiary of DCG when Silbert started the venture in 2015.
Genesis’ crypto lending arm, Genesis Global Capital, announced in November that its crypto lending arm would stop making new loans and block clients. to withdraw fundsciting market dislocation caused by the FTX collapse.
Genesis Global Capital had partnered with several other crypto companies, including the crypto exchange Gemini, to offer a crypto lending product. Gemini now says its clients owe $900 million from Genesis.
genesis must over $3 billion to its creditors, including Gemini, according to a person familiar with the matter.
DCG itself owes $1.675 billion to Genesis’s crypto-lending arm, according to a November letter Silbert sent to shareholders. That includes a $1.1 billion IOU that appears to be related to liabilities DCG took over from Genesis after it was hit hard by the collapse of Singapore-based cryptocurrency hedge fund Three Arrows Capital.
Silbert founded Grayscale Investments in 2013 after stepping down as CEO of SecondMarket. After selling SecondMarket to Nasdaq Inc. (NDAQ.O) in 2015, he launched DCG, with Grayscale as one of the firm’s subsidiaries.
Grayscale’s flagship, Grayscale Bitcoin Trust (GBTC), is the world’s largest bitcoin trust, one that the company hopes will one day become an exchange-traded fund.
GBTC has not traded at a premium relative to the price of bitcoin, its underlying asset, since early 2021. DCG has embarked on an effort to reduce the discount in 2021 and announced a plan to spend up to $1 billion on the purchase. of GBTC shares.
Troubles in Genesis’s lending business had no impact on DCG and its subsidiaries, DCG said in November, while Grayscale said its underlying assets were not affected.
OTHER VENUE CAPITAL INVESTMENTS
DCG is a prolific venture capital investor, listing more than 160 companies in its portfolio on its website, of which it has acquired 28, it says. Cryptocurrency exchange Luno and cryptocurrency mining and staking company Foundry are listed as subsidiaries.
DCG is also an investor in US cryptocurrency exchanges Coinbase (COIN.O) and Kraken, and its other holdings include US firm Circle, which runs stablecoin USDC, and blockchain analytics firms Chainalysis, Dune Analytics, Elliptic, and Etherscan.
Reporting by Elizabeth Howcroft in London and Hannah Lang in Washington; Edited by Lananh Nguyen and Matthew Lewis
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