Genesis said it was trying to avoid bankruptcy, but investors fear its collapse could bring down other companies and related projects.
Here’s what we know about the many companies owned by the Digital Currency Group:
DCG acquired cryptocurrency news site CoinDesk in 2016 after previously investing in the medium. At the time, TechCrunch valued the deal at $500,000 to $600,000.
In November, CoinDesk released a leaked balance sheet of Alameda Research, the cryptocurrency trading firm founded by Sam Bankman-Fried. Many industry observers cited this report as the catalyst for the fall of Alameda-based cryptocurrency exchange FTX and Bankman-Fried, which filed for bankruptcy less than two weeks later.
Genesis Trading was originally DCG CEO Barry Silbert’s bitcoin trading arm of SecondMarket, but was relaunched under its new name as a subsidiary of DCG when Silbert launched the venture capital firm in 2015.
Genesis’ crypto lending arm, Genesis Global Capital, announced in November that its crypto lending arm would stop making new loans and prevent customers from withdrawing funds, citing market dislocation caused by the FTX crash.
Genesis Global Capital had partnered with a number of other cryptocurrency companies, including cryptocurrency exchange Gemini, to offer a cryptocurrency lending product. Gemini now says its customers owe Genesis $900 million.
Genesis owes more than $3 billion to its creditors, including Gemini, according to a person familiar with the matter.
GDC itself owes $1.675 billion to the cryptocurrency lending arm of Genesis, according to a letter Silbert sent to shareholders in November. This includes a $1.1 billion IOU that appears to be tied to debts DCG incurred from Genesis after it was hit hard by the collapse of Singapore-based cryptocurrency hedge fund Three Arrows Capital.
Silbert started Grayscale Investments in 2013 after stepping down as CEO of SecondMarket. After selling SecondMarket to Nasdaq Inc in 2015, he launched DCG, Grayscale being one of the company’s subsidiaries.
Grayscale’s flagship fund, Grayscale Bitcoin Trust (GBTC), is the largest bitcoin fund in the world, a fund the company hopes will one day be transformed into an exchange-traded fund.
GBTC has not traded at a premium to the price of bitcoin, its underlying asset, since early 2021. DCG has embarked on an effort to reduce the discount in 2021, announcing a plan to spend up to $1 billion to buy GBTC shares.
Problems with Genesis’s lending business have not impacted DCG and its subsidiaries, DCG said in November, while Grayscale said its underlying businesses were unaffected.
OTHER VENTURE CAPITAL INVESTMENTS
DCG is a prolific venture capitalist, 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 firm Foundry are listed as subsidiaries.
DCG is also an investor in US cryptocurrency exchanges Coinbase and Kraken, and its other holdings include US-based Circle, which operates stablecoin USDC, and blockchain analytics firms Chainalysis, Dune Analytics, Elliptic and Etherscan.