Genesis stops lending and withdrawing money, 10 billion USD crypto empire is suspected of going bankrupt

In the field of cryptocurrencies, DCG is quite famous.

The suspension of withdrawals at the cryptocurrency broker Genesis amid the widespread cryptocurrency crisis has turned unwanted attention to Barry Silbert – the man who holds the “throne” of the Digital Currency Group empire. DCG).

Silbert is a rather private person, rarely giving interviews to the press or speaking at conferences about cryptocurrencies in the industry. He founded DCG in 2015. Last year, DCG’s value reached 10 billion USD after selling 700 million, led by Softbank investors. DCG has 66 employees as of early November and has more than 200 companies in its portfolio.

DCG’s reach is huge: In addition to the lending company Genesis, they also control the asset management company Grayscale Investment, which provides the world’s largest cryptocurrency fund. DCG is also the parent company of cryptocurrency mining service provider Foundry Digital, owner of Coidesk newspaper and Luno exchange. DCG declined an interview request from Bloomberg.

In the field of cryptocurrencies, DCG is quite famous. The company’s portfolio over the years includes everything from exchanges like Coinbase to hardware maker Ledger to crypto-focused bank Silvergate.

“They have a pretty big deal in the crypto space,” said Wilfired Daye, CEO of Securitize Capital, a digital asset management firm. “They are everywhere.”

With Genesis suspending withdrawals, DCG’s financial health became a big question, especially after the shock of FTX exchange and former CEO Sam Bankman-Fried. Genesis is seen as the “crown” in Silbert’s realm, building itself into one of the world’s largest and most popular brokerage firms, allowing funds and market makers to borrow money or money. numbers to enhance their transactions.

Silbert first bought Bitcoin in 2012 when the industry was in its infancy. He started the company with partners who all went on to become luminaries in the crypto world. Some names can be mentioned such as Michael Moro – who left the CEO position of Genesis in August or Ryan Silkis – co-founder of Messari and Meltem Demirors – Chief Strategy Officer of CoinShares.

Grayscale has been largely unscathed from the latest volatility – the company was quick to say on Wednesday that its products are still running as normal. Even so, the asset management company is dealing with its own problems. The $10.7 billion Grayscale Bitcoin Trust Bitcoin Fund is currently trading at a record low as the cryptocurrency’s price fluctuates.

However, despite the record drop, GBTC is still seen as a money machine for Grayscale – and even DCG. This trust collects from its shareholders a 2% annual fee. This means that even though CGTC has seen billions of dollars in declines since its peak of $40 billion last November, Grayscale still has over $200 million in fund fees each year at its current level of assets under management.

Genesis’ move on Wednesday only affects its lending business, according to interim CEO Derar Islim. He also confirmed the company is still “operating at full capacity”. However, the decision to suspend withdrawals came after the broker’s prolonged difficulties.

The problem began to surface after Genesis was involved in the bankruptcy of the Three Arrows Capital fund. Genesis is the largest creditor involved in this bankruptcy. DCG assumed some debt and filed a $1.2 billion claim with Three Arrows. Genesis said in October, before the crash of FTX that its lending dropped 80% in the third quarter.

“Genesis Global Capital – Genesis lending has had to make the difficult decision to temporarily block withdrawals and issue new loans. This decision was made in response to the market turmoil and loss of confidence in the market following the crash of FTX. This affects the lending business at Genesis and does not affect the trading and asset management business. Most importantly, it does not affect the business operations of DCG and our other affiliates,” the company representative said.

Amid such turmoil, DCG also reshuffled the senior leadership team. Mark Murphy has been appointed chairman, resigning as COO. In addition, about 10 employees have left the company and positions such as Chief Risk Officer have also left.