- Genesis’ parent company Digital Currency Group (DCG) is considering liquidating its $500 million venture capital portfolio to assist Genesis in covering the debt.
- DCG’s crypto-related portfolio includes over 200 companies, including exchanges, lenders, custodians, banks, and other projects.
- Genesis has yet to return over $900 million to Gemini Earn users.
Genesis seems to be in bigger trouble than previously thought. The crypto broker owes more than $3 billion to its creditors, according to a report by Forbes.
The massive debt has prompted Genesis’ parent Digital Currency Group (DCG) to consider liquidating part of its venture capital portfolio to bail out its wholly-owned subsidiary.
Barry Silbert conglomerate’s portfolio includes over 200 crypto-related companies. DCG has invested in numerous crypto exchanges, lenders, banks, and other projects in at least 35 countries. The portfolio is worth around $500 million.
Beef with Gemini
The partial liquidation of DCG’s venture capital portfolio still pales in comparison to Genesis’ debt. At least $900 million out of the $3 billion is owed to crypto exchange Gemini’s Earn program users. Gemini’s Earn yield program was built on the relationship with Genesis, which halted withdrawals on November 17.
Genesis’ debt to Gemini users has been the subject of the recent public beef between Gemini CEO Cameron Winklevoss and DCG co-founder and CEO Silbert. Winklevoss has accused Silbert of accounting fraud and asked the DCG board to “immediately” remove him from the company.
In particular, Winklevoss claimed in its second public letter to the DCG board that Silbert intentionally mislabeled DCG’s 10-year promissory note to Genesis as “Current Assets” in financial reports sent to Gemini after crypto hedge fund Three Arrows Capital (3AC) and FTX collapsed last year.
In truth, the promissory note can’t be converted into cash, which didn’t help Genesis improve its financial health. According to Winklevoss, Silbert and DCG tried to hide this from creditors and committed accounting fraud. Gemini has terminated its loan agreement with Genesis and ended the Earn program on Wednesday.
Silbert has denied all allegations brought against him by Winklevoss.
On the Flipside
- There’s no official confirmation of what Genesis’ debt is.
- DCG’s crypto portfolio liquidation might give Genesis some breathing room and time to come up with the rest of the owed money.
Why You Should Care
Genesis is perhaps the last major crypto lender left still operating. Crypto investors and users should consider following this story closely as any potential outcome could significantly impact digital asset prices.
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