Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

DCG plans to offer Genesis creditors equity through bankruptcy package - report

Published 19/01/2023, 10:41 pm
© Reuters

By Geoffrey Smith -- Barry Silbert is offering a stake in his digital currency empire to the creditors of its stricken lending unit Genesis, according to a report in The Block.

Genesis, which suspended client withdrawals in November after the collapse of crypto exchange FTX, is preparing to file for chapter 11 bankruptcy as early as this week, according to Bloomberg. That would confirm what has been increasingly apparent over recent weeks - that Genesis' catastrophic losses during the 2022 crypto meltdown had rendered it insolvent.

Under a resolution package proposed by Silbert, its creditors would receive cash payments and equity in Silbert's Digital Currencies Group after a grace period lasting up to two years, The Block reported.

It's unclear whether that would be enough to satisfy Genesis' highest profile creditors, crypto pioneers Cameron and Tyler Winklevoss. The twin owners of investment platform Gemini have loudly complained in recent weeks that the 340,000 customers of its own lending program Earn are owed $900 million by Genesis. Gemini itself may be on the hook to make those customers whole if it can't disgorge the money from Genesis.

According to an open letter published last week by Cameron Winklevoss, Genesis had lost around half of the $2.4B it lent to hedge fund 3 Arrows Capital when the latter collapsed last spring, a victim of the Terra/Luna stablecoin implosion. According to Winklevoss, 3AC had been recycling much of that money into DCG's Grayscale Bitcoin Trust, one of only very few registered ETFs giving investors indirect access to Bitcoin. That ETF's value tumbled last year as Bitcoin lost over two-thirds of its value, while its discount to the net asset value of its holdings widened sharply, an indication of skepticism about the quality of the trust's asset backing.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.