By
Tolu Ajiboye
February 15th, 2024
DCG chief Barry Silbert assured investors that the situation at hand is manageable and that they would come out ‘stronger’ from the current liquidity crisis at Gensis Global.
The collapse of the crypto exchange FTX has even impacted giants like the Digital Currency Group (DCG). On Tuesday, November 22, Digital Currency Group CEO Barry Silbert said that the company will emerge stronger from the current crypto winter.
Digital Currency Group CEO Shares His Vision
DCG is the parent firm of crypto lender Genesis Global and the world’s largest asset manager Grayscale. As per recent reports, Genesis has been facing severe liquidity issues amid massive withdrawals following the FTX collapse. The crypto lender was looking to raise $1 billion but found it difficult to find buyers for its loan book.
Crypto conglomerate Digital Currency Group (DCG) has been caught in the fire as well. Besides, it also owes the Genesis Trading arm a staggering $575 million. In a letter to investors seen by the Wall Street Journal, Barry Silbert said that $575 million worth of intercompany loans are due in May 2023. Alike other crypto firms, DCG has also taken out several crypto loans, said Silbert.
The company chief added that DCG used the loan funds towards investments and repurchasing DCG stock from non-employees. Related to the default of Three Arrows Capital (3AC) DCG also owes Genesis $1.1 billion on a promissory note due in June 2032. Despite this, Silbert is confident that DCG will come out of the mess. In a note to investors, he wrote:
“DCG will continue to be a leading builder of the industry and we are committed to our long-term mission of accelerating the development of a better financial system. We have weathered previous crypto winters and while this one may feel more severe, collectively we will come out of it stronger.”
Seeking Financial and Legal Help
Silbert also spoke about the liquidity issue at Genesis and the mismatch of its loan book following the FTX collapse. He further added that these issues have no impact on Genesis’s custodial business or its spot and derivatives trading business.
Silbert added that the Genesis board and leadership have decided to hire financial and legal advisors while exploring other available options. Hinting at no major risks, Silbert said:
“In recent days, there has been chatter about intercompany loans between Genesis Global Capital and DCG. For those unaware, in the ordinary course of business, DCG has borrowed money from Genesis Global Capital in the same vein as hundreds of crypto investment firms. These loans were always structured on an arm’s length basis and priced at prevailing market interest rates”.
However, another report from New York Times notes that Genesis Global has hired an investment bank Moelis & Company to explore options including a potential bankruptcy. Sources familiar with the matter said that the final decision isn’t yet made and that it was still possible to avoid bankruptcy. “Our goal is to resolve the current situation without the need for filing a bankruptcy,” a Genesis spokesman said.