Factbox: The many companies in the Digital Currency Group’s crypto empire

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Jan 20 (Reuters) – U.S. crypto firm Digital Currency Group (DCG) is at the center of the industry’s latest crisis after one of its companies, Genesis, froze customer withdrawals in November.

Genesis Global Capital’s lending unit filed for creditor protection in the United States on Thursday.

Here’s what we know about the many companies that Digital Currency Group owns:

COINDRESQUE

DCG acquired crypto news website CoinDesk in 2016 after previously investing in the outlet. TechCrunch at the time estimated the deal to be worth around $500,000 to $600,000.

CoinDesk released a leaked balance sheet from Alameda Research, the crypto trading firm founded by Sam Bankman-Fried, in November. Many industry watchers cited the report as the catalyst for the downfall of crypto exchange FTX from Alameda and Bankman-Fried, which filed for bankruptcy less than two weeks later.

GENESIS

Genesis Trading was originally the bitcoin trading arm of DCG CEO Barry Silbert’s SecondMarket, but was relaunched with its new name as a subsidiary of DCG when Silbert launched the venture capital firm in 2015. .

Genesis’s crypto lending arm, Genesis Global Capital, announced in November that it would stop making new loans and prevent customers from withdrawing funds, citing market dislocation caused by the collapse of FTX.

Genesis Global Capital had partnered with a number of other crypto companies, including crypto exchange Gemini, to offer a crypto lending product. Gemini now says its customers owe Genesis $900 million.

Genesis owes more than $3 billion to creditors including Gemini, according to a person familiar with the matter.

DCG itself owes $1.675 billion to Genesis’ crypto lending arm, according to a November letter Silbert sent to shareholders. This includes a $1.1 billion promissory note that appears to be tied to liabilities DCG assumed from Genesis after it was hit hard by the collapse of Singapore-based crypto hedge fund Three Arrows Capital.

SHADES OF GREY

Silbert started Grayscale Investments in 2013 after stepping down as CEO of SecondMarket. After selling SecondMarket to Nasdaq Inc (NDAQ.O) in 2015, it launched DCG, with Grayscale as one of the company’s subsidiaries.

Grayscale’s flagship product, Grayscale Bitcoin Trust (GBTC), is the world’s largest bitcoin fund, a fund the company hopes will one day convert to an exchange-traded fund.

GBTC has not traded at a premium to the price of bitcoin, its underlying asset, since early 2021. DCG embarked on an effort to reduce the discount in 2021, announcing a plan to spend up to to $1 billion to buy GBTC shares.

Problems with Genesis’ lending business had no impact on DCG and its subsidiaries, DCG said in November, while Grayscale said its underlying assets were unaffected.

OTHER VENTURE CAPITAL INVESTMENTS

DCG is a prolific venture capitalist, listing more than 160 companies in its portfolio on its website, of which it has acquired 28, it says. Crypto exchange Luno and crypto mining and staking company Foundry are listed as subsidiaries.

DCG is also an investor in US crypto exchanges Coinbase (COIN.O) and Kraken, and its other holdings include US-based Circle, which runs the USDC stablecoin, and blockchain analytics firms Chainalysis, Dune Analytics, Elliptic and Etherscan.

Reporting by Elizabeth Howcroft in London and Hannah Lang in Washington; Editing by Lananh Nguyen and Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.

Elizabeth Howcroft

Thomson Reuters

Reports on the intersection of finance and technology, including cryptocurrencies, NFTs, virtual worlds and money that generates “Web3”.

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