The CEO of DCG defended Genesis in front of its shareholders, alleging that its liquidity problems do not affect its other business areas.
The CEO of Digital Currency Group, Barry Silbert, revealed to his shareholders that the company has a liability with Genesis Global Capital for 575 million dollars and that it matures in May 2023, loans that were used to finance “investment opportunities”.
Barry Silbert disclosed the following to his shareholder meeting:
“DCG currently has a liability with Genesis Global Capital of ~$575 million, due May 2023. These loans were used to fund investment opportunities and repurchase DCG shares from non-employee shareholders in secondary transactions previously highlighted in quarterly shareholder updates.”
Silbert said he understood the Genesis situation, and that in the “ordinary course of business”, DCG borrowed money from Genesis Global, like any of the other “hundreds of companies” crypto. He explained that the loans were structured on terms of “full competition,” and were quoted at prevailing market rates.
Days ago, Genesis requested an “emergency loan” of 1,000 million dollars from investors. It happened before suspending withdrawals on its website, the Wall Street Journal reported, citing a confidential fundraising document.
DCG Rules Out Being in Financial Trouble
Even Derar Islim, CEO of Genesis Global Capital, confirmed the temporary closure of the cryptocurrency loan department, thus ceasing the possibility of withdrawing funds.
However, Barry Silbert said he was excited about the future of DCG:
“We appreciate the words of encouragement and support, along with the offers to invest in DCG. We will let you know if we decide to do a round of funding. Despite the difficult conditions in the industry, I am more excited than ever about the potential of cryptocurrencies and Blockchain technology in the coming decades and DCG is determined to remain at the forefront.”
In addition, Silbert specified that Genesis is going through a moment of “liquidity imbalance”, which “has no impact on its custody or trading businesses” and that Genesis continues to operate normally; however, he did not clarify if he will settle his debt before or until the agreed date.
“Genesis leadership and its board have decided to retain financial and legal advisors and the firm is exploring all possible options amid the fallout from the FTX implosion.”
Events Surrounding DCG and Genesis
It should be recalled that DCG also owes Genesis $1.1 billion in a note due June 2032, related to the Three Arrows Capital default.
On November 16, Genesis suspended client withdrawals citing the impact of FTX bankruptcy and bankruptcy. The company sought a billion-dollar bailout before halting the withdrawals, according to an earlier report in the Wall Street Journal, and warned just days ago of potential bankruptcy.
“Genesis leadership and its board have decided to retain financial and legal advisors, and the firm is exploring all possible options amid the fallout from the FTX implosion,” Silbert reaffirmed in his letter.
FTX, once one of the world’s leading cryptocurrency exchanges, imploded earlier this month amid allegations that its founder, Sam Bankman-Fried, mishandled client funds. , funneling billions to sister company Alameda Research, a trading firm founded by Sam Bankman-Fried in 2019 before officially retiring from day-to-day management in 2021, which apparently used the funds to place risky crypto bets.
By Audy Castaneda