Cryptocurrency broker Genesis Global Trading allegedly owes its creditors more than $3 billion, according to a Jan. 12 Financial Times report. Its parent company, DDigital Currency Group (DCG), which also owns Grayscale Investments and its series of digital asset trusts, intends to sell some of its venture capital holdings to make up the shortfall.
According to people familiar with the matter, DCG’s venture arm has more than 200 cryptocurrency-related projects “as exchanges, banks, and custodians in at least 35 countries,” with a total valuation of around $500 million. G.enesis has reportedly hired investment bank Moelis to explore strategic alternatives, although people familiar with the matter said there was little interest in injecting capital. On January 5, Genesis laid off 30% of its workforce as a cost-cutting measure, the second of its kind in six months.
On Jan. 12, DCG boss Barry Silbert wrote to shareholders that “bad actors and the implosion of major cryptocurrency companies had wreaked havoc on the industry.” Silbert also revealed that Three Arrows Capital still owes Genesis $447.5 million and 4,550 Bitcoin (BTC) worth $78 millionwhich mature in May 2023. Three Arrows Capital is currently in bankruptcy proceedings and creditors have expressed great frustration towards the process.
Cointelegraph reported on Nov. 16, 2022, that Genesis halted withdrawals citing “unprecedented market turmoil.” At the time, the company reportedly had $175 million worth of funds tied up in FTX and had already received a $140 million capital injection to cover losses.
Previously, Genesis Global was thought to have an estimated $1 billion shortfall. According to Cameron Winklevoss, co-founder of the Gemini cryptocurrency exchange, Genesis lent more than $2.3 billion to the defunct hedge fund Three Arrows Capital, leaving it with a $1.2 billion loss when the firm went bankrupt in June 2022. Gemini said it lent more than $900 million in customer deposits to Genesis as part of its Earn program. More than 340,000 users have been affected by the Gemini Earn Genesis Global dispute.
Earn Update: An Open Letter to the Board of @DCGco pic.twitter.com/eakuFjDZR2
— Cameron Winklevoss (@cameron) January 10, 2023
This is a developing story, and more information will be added as it becomes available.
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