Digital Currency Group might sell assets from its venture portfolio to come up with funds to help Genesis, its wholly-owned subsidiary, cover a $3 billion shortfall, according to a report on Thursday from the Financial Times.
That means DCG’s stakes in more than 200 crypto projects—including data firm Dune Analytics, Ethereum block explorer Etherscan, crypto exchange Coinbase, and USD Coin issuer Circle—could soon be up for sale.
The portfolio is worth about $500 million, according to the Financial Times report, citing unnamed people familiar with the matter.
Genesis has been rumored to be struggling to stay afloat since mid-November when the company suspended client withdrawals for its lending arm citing exposure to the now-collapsed FTX. The announcement came just days after the crypto exchange, along with more than 130 other entities, filed for bankruptcy on November 11.
Our #1 priority is to serve our clients and preserve their assets. Therefore, in consultation with our professional financial advisors and counsel, we have taken the difficult decision to temporarily suspend redemptions and new loan originations in the lending business.
— Genesis (@GenesisTrading) November 16, 2022
But messaging from Genesis about the extent of its exposure has been inconsistent.
On November 10, the company said on Twitter that its derivatives business has approximately $175 million locked in an FTX trading account.
“This does not impact our market-making activities,” Genesis said at the time. “Furthermore, our operating capital and net positions in FTX are not material to our business. Circumstances surrounding FTX have not impeded the full functioning of our trading franchise.”
As a knock-on effect of the frozen withdrawals, Gemini’s Earn product, which uses Genesis as its lending partner, has had to freeze customers’ withdrawals. It’s estimated that Genesis owes customers of the Winklevoss-founded crypto broker $900 million.
Since then, the two firms have exchanged serious criticisms and accusations. Earlier this week, Gemini CEO and co-founder Cameron Winklevoss publicly accused crypto broker Genesis and DCG of accounting fraud.
The same day, DCG CEO Barry Silbert shot back at what he called “another desperate and unconstructive publicity stunt,” saying that the company was “preserving all legal remedies in response to these malicious, fake, and defamatory attacks.”
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Source: https://decrypt.co/119043/dcg-mulls-venture-portfolio-sale-shore-3b-genesis-shortfall-report
