Digital Currency Group (DCG), a venture capital conglomerate that has subsidiaries including Genesis and Coindesk, reportedly recorded over $1 billion in losses in 2022. The losses were attributed to the collapse of Three Arrows Capital (3AC), which had a significant impact on Genesis. Genesis was 3AC’s biggest lender and had lent the hedge fund $2.36 billion in undercollateralized loans. When 3AC failed to repay its loan, Genesis suffered millions of dollars in losses.
$24M Q4 Loss
According to a report by Coindesk, DCG’s full-year revenue was $719 million, and Q4 revenue was $143 million, with a loss of $24 million. Total assets were valued at $5.3 billion, which included cash and cash equivalents worth $262 million, investments in ventures and funds, tokens, and shares in Grayscale trusts totaling $670 million. The remaining assets were held by Grayscale and cryptocurrency mining and staking business Foundry.
DCG’s equity valuation stood at $2.2 billion, representing a price per share of $27.93. The report stated that “this appraisal is generally consistent with the sector’s 75%-85% decline in equity values over the same period.”
However, DCG claimed to have reached a milestone in Genesis restructuring by striking a deal with some major creditors. As part of the agreement, DCG intends to exchange its $1.1 billion promissory note, which will mature in 2032, for “redeemable, convertible stock” to Genesis Capital creditors. The deal also includes an extension of the due date of DCG’s obligations from May 2023 to June 2024.
DCG plans to hand over its equity stake in Genesis Global Trading to Genesis Global Holdco and eventually sell both entities to settle creditors. However, the conglomerate has come under fire recently, with CEO Barry Silbert being asked to step down from his position. A group of Genesis creditors has also filed a securities lawsuit against DCG and Silbert, alleging that they both violated securities laws.
The losses recorded by DCG are part of the challenges facing the crypto industry as it continues to evolve. The collapse of 3AC and the resulting losses for Genesis highlight the need for caution and prudence in the industry. Nonetheless, DCG’s deal with creditors and its plans to sell off entities and settle debts represent a positive step towards recovery.