DCG would sell assets to cover Genesis $3 billion deficit

DCG looking to sell assets to cover Genesis’ $3 billion deficit

13.01.2023 13:57 (Updated 13.01.2023 13:01)
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by Sviatoslav Pinchuk
3 min read

The Financial Times reports that the Digital Currency Group (DCG) plans to sell some assets from its venture portfolio to help Genesis with its $3 billion deficit.

According to FT, DCG’s (Digital Currency Group) portfolio is worth $500 million. It is heavily invested in over 200 crypto projects, including data intelligence platform Dune Analytics, USDC stablecoin issuer Circle, and crypto exchange Coinbase. If DCG makes such a decision, these stakes will soon be on sale.

After the collapse of the FTX crypto exchange, Genesis immediately halted users’ redemptions, stressing that Genesis lost $175 million in locked funds of the collapsed crypto exchange. DCG came to help, infusing $140M equity in the wholly-owned subsidiary broker.

At that time, Genesis said about the exposure:

This does not impact our market-making activities,” Genesis said at the time. “Furthermore, our operating capital and net positions in FTX are not material to our business. Circumstances surrounding FTX have not impeded the full functioning of our trading franchise.

Yet, since the FTX collapse, Genesis can’t find a way out of the situation. The Gemini Earn product, where Gemini acted as an intermediary between its clients and Genesis, is still frozen.

Crypto company Gemini has made several attempts to get Gemini Earn customers’ funds out of Genesis. The latter ended with Gemini’s co-founders abandoning Gemini Earn, accusing Genesis and DCG of withholding debt and dishonest behavior, and setting a deadline to resolve the issue. Barry Silbert, the founder of DCG, refused to answer those accusations and did not present a plan, instead stating that:

It is another desperate and unconstructive publicity stunt. The company preserving all legal remedies in response to these malicious, fake, and defamatory attacks.

The Gemini-Genesis saga has led to the SEC filing charges today against the two companies for making unregistered offers through the Gemini Earn product.

Related: SEC charges Gemini and Genesis with offering unregistered securities

DCG is also no exception. According to the Bloomberg report, EDNY and SEC are investigating the internal transfers between DCG and Genesis. As of the time of writing, no charges have been made yet, with the DCG representative even saying the company was unaware of the open investigation:

DCG has a strong culture of integrity and has always conducted its business lawfully. We have no knowledge of or reason to believe that there is any Eastern District of New York investigation into DCG.

Related: Gemini clients file class-action arbitration case 

Author

  • Man who simply bought some BTC for domestic needs in 2014 and then forgot about it till 2017. The dude who got Ethereum in 2017 by misclick and sold it in 2018 "just to try". Lost 1 Florida house in XEM in 2018, Sviatoslav finally decided to trade reasonably and now he is one of the most analytical and data-driven trader in Crypto Industry. Has Bachelor Degree of Chinese Interpreter and deep practical experience in competitive niches SEO.

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