In the words of Barry Silbert, “For those unaware, in the ordinary course of business, DCG has borrowed money from Global Digital 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.”
In his letter to shareholders, Barry Silbert, the CEO of Digital Currency Group, said the firm owes $575M to Genesis Global Capital. He claimed the intercompany loans with Genesis’ lending arm were used to fund investments and repurchase DCG stocks.
Silbert admitted that so far, DCG has only raised $25M in primary capital. Furthermore, DCG has a $1.1B provisionary note to bankrupt hedge fund 3AC that it needs to repay by June 2032. The firm also has $350M outstanding loans to a “small group of investors” led by Eldridge.
Despite DCG’s liabilities amounting to $2B, Silbert remains positive that the firm will be able to raise $800M by the end of 2022. He reassured investors that the firm will be able to weather the crypto winter, adding,
“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.”
Meanwhile, Genesis’ balance sheet revealed liabilities worth $2.8B, with 30% of the outstanding loans issued to its associate companies, including DCG.
Genesis has also sought the aid of Moelis & Company to “[explore] all possible options amidst the fallout from the implosion of FTX.” Sources revealed Genesis is yet to make any financial decisions and it may avoid filing for bankruptcy.
