Cryptocurrency brokerage Genesis reportedly owes creditors over $3bn, which is prompting its owner, Digital Currency Group (DCG), to sell assets in its venture portfolio to raise money.
DCG, which owns crypto media company CoinDesk and investment manager Greyscale, is looking to raise funds after Genesis was impacted by FTX’s collapse, according to a report from the Financial Times.
The firm is considering selling a portion of its venture capital portfolio, which includes 200-crypto related projects and is worth around $500m. The report states that its investments are illiquid and could take a while to sell, particularly as investors are being cautious of the crypto space.
According to the FT, the firm has struggled to draw interest for outside funding. It has enlisted the help of investment bank Moelis.
Additionally, Genesis has cut 30% of its workforce and shut its wealth management business to reduce costs.
The cryptocurrency brokerage’s debts include $900m to customers of crypto exchange Gemini, €280m to Dutch exchange Bitvavo and an undisclosed amount to customers of crypto savings platform Donut.
Genesis’ market struggles were shown in late 2022. The firm sought a $140m equity infusion from DCG to support its balance sheet. The cryptocurrency brokerage had $175m locked in a trading account of FTX, which had filed for bankruptcy protection.
At the time, Genesis sent an email to its clients. It said, “While the operation of our lending and trading businesses has not been impacted by recent market events, Genesis has taken steps to strengthen its balance sheet with an additional equity infusion of $140m from our parent company, Digital Currency Group.” It added that the additional capital would bolster its position in the crypto market and enable it to support customers.
Later that month, Genesis halted withdrawals, which it blamed on the ‘unprecedented market turmoil.’
DCG was founded in 2015 by Barry Silbert and has become one of the biggest investors of crypto coins and companies – it was valued at $10bn in 2021.
Gemini co-founder Barry Silbert recently called for the sacking of Silbert who he believes is ‘unfit’ to run the group.
Silbert replied to shareholders stating that the crypto industry had been ‘all but destroyed by a wave of unprecedented fraud and criminal behaviour’ and that DCG was making ‘meaningful changes to position the firm for long-term success.’
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