Sources: crypto broker Genesis owes creditors more than $3B, leading DCG to explore selling venture assets, estimated to be worth ~$500M, to raise cash
Barry Silbert's conglomerate weighs offloading venture assets to help wholly owned digital asset lender
Financial TimesNikou Asgari
Context & Ripple Effects
Genesis's hole has been widening all year: the trading firm flagged potential losses in the hundreds of millions through exposure to 3AC and Babel Finance last June, then failed to raise the $1B+ its lending unit sought and warned investors of a possible bankruptcy filing in November. By December, parent DCG was itself scrambling to raise capital to keep Genesis out of bankruptcy, partly to avert a $350M repayment to Todd Boehly's Eldridge.
First-order effects
Genesis's creditor shortfall is now quantified at more than $3B, and DCG — Barry Silbert's wholly owned structure — is the only remaining source of support, forcing it to shop venture assets worth roughly $500M at what are likely distressed prices.
Second-order effects
Creditors such as the Winklevoss twins' Gemini, who later pressed a ~$1.47B 'final offer' on Silbert for a restructuring, gain leverage as DCG's asset sales signal its cash is finite; a sale that falls short pushes the shortfall back onto Genesis's creditor recovery rates.
Third-order effects
The pattern — a holding company cross-subsidizing a failed lender until both are impaired — points to the unwind of the vertically integrated crypto conglomerate, with parent-subsidiary fund flows (as later surfaced in Genesis's own lawsuit against DCG) becoming the central dispute in these bankruptcies.
The trend: Crypto holding companies built on cross-subsidized lending are being forced to liquidate their venture portfolios as lender shortfalls outgrow parent balance sheets.
Scoop: More Genesis creditors say crypto lender duped them https://protos.com/... via @Protos “...those financial documents were inaccurate and hid the firm's growing financial problems.”
@ramahluwalia As a direct Genesis creditor, I can confirm that I was provided this balance sheet, that Griffin Tiedy explained it to me, and the ONLY reason that we kept half our money at Genesis in September was because the loan appeared to make Genesis solvent when he explained…
Ryan has an intriguing hypothesis re: $1.1 Bn loan. ‘Current’ has two meanings: 1) convertible to cash in under a year, 2) a loan that is performing. Which meaning is Barry invoking? It would be misleading not to clarify. That is Q #1 https://twitter.com/...
FT: Genesis owes creditors more than $3 billion, and DCG is considering selling some of its venture capital assets to raise cash. Genesis' debts include $900 million owed to Gemini clients, €280 million owed to Dutch exchange Bitvavo, and crypto savings firm Donut.
New: Crypto broker Genesis owes creditors more than $3bn DCG (backed by Softbank and previously advised by Larry Summers + Glenn Hutchins) is considering selling down its $500mn venture portfolio as one way to fill the hole https://www.ft.com/...
UPDATE: DCG/Genesis liabilities balloon to beyond $3.1B. **facing decisions to liquidate portfolio assets (which won't cover even 10% of the above sink hole). **reminder - said two months ago there was ZERO interest in their capital raise.
Does current asset mean “due within one year” or “performing & current”? You're going to get an accounting and legal master class in the coming months. https://twitter.com/...