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Digital Currency Group Owes Genesis Trading Arm $575 Million by May

Digital Currency Group (DCG) CEO Barry Silbert recently shared a letter with investors illuminating the cryptocurrency conglomerate’s web of external and intercompany loans.

Among them is a newly disclosed liability of $575 million to its lending subsidiary Genesis, due by May of 2023.

What’s Going On With DCG?

As reported by the Wall Street Journal on Tuesday, Silbert’s letter sought to assure investors that the company was still secure amid the chaotic crypto bear market that’s claimed multiple industry giants already.

“We have weathered previous crypto winters and while this one may feel more severe, collectively we will come out of it stronger,” Mr. Silbert wrote.

The CEO said the $575 million loan from Genesis went towards buying back stock from shareholders and funding further investment opportunities.

DCG also owes Genesis a $1.1 billion promissory note by June 2032. The note was created to assume liabilities from Genesis related to the collapse of crypto hedge fund Three Arrows Capital (3AC) in June, while DCG attempts to recover assets from 3AC’s bankruptcy proceedings.

According to BNN Bloomberg, DCG’s remaining debt includes a $350 million lending facility “from a small group of lenders led by Eldridge,” an American holding company. In terms of revenue, DCG is expected to bring in $800 million by the end of the year, on top of $25 million in primary funding.

“Let me be crystal clear: 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,” Silbert added.

DCG’s Subsidiaries

DCG is the parent company to numerous high-profile crypto firms including Genesis, Foundry (a Bitcoin mining firm), and Grayscale (the world’s largest Bitcoin fund).

Genesis took a major blow from the fallout of crypto exchange FTX, within which the lending firm said $175 million is now trapped. The company’s lending arm has since halted withdrawals, creating additional issues for customers of Gemini Earn.

As Bloomberg detailed, Silbert wrote that Genesis Global has $2.8 billion in outstanding loans on its balance sheet, of which 30% are made to related parties and its parent company.

Confidential documents revealed last Friday that Genesis sought $1 billion from investors to help it sort through its liquidity issues. On Monday, Genesis was reportedly considering bankruptcy given that it had still failed to raise such funds.

Even Grayscale has come under scrutiny due to its refusal to provide on-chain proof of reserves for its Bitcoin holdings. Coinbase custody has since reassured that the Bitcoin Trust is indeed fully backed.

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