DCG's Genesis Owes Creditors $3B and May Need to Offload Assets

https://fortune.com/crypto/2023/01/12/genesis-owes-creditors-3-billion-digital-currency-group-silbert-winklevoss/

Genesis parent company DCG, which also controls crypto media outlet CoinDesk and investment manager Grayscale, has an expansive portfolio worth $500 million that it could sell to raise funds, the FT reported, citing people familiar with the matter.

Because of lackluster results from the company’s search for new outside funding, it may need to offload some holdings that include 200 crypto-related companies spanning 35 countries.

Some of its most high-profile investments include the crypto exchanges Coinbase, Kraken, and Blockchain.com. In a shareholder letter this week, DCG CEO Barry Silbert said the company also invested $250,000 in FTX.

The massive sum owed to creditors comes out as Genesis and DCG continue to clash with the crypto exchange Gemini, founded by Cameron and Tyler Winklevoss of The Social Network fame.

In two letters published since the start of the year, Gemini cofounder Cameron Winklevoss has demanded Silbert pay $900 million that Winklevoss claims Genesis owes to 340,000 of the crypto exchange’s customers. He later called for Silbert to be ousted as CEO.

Through Gemini’s Earn product, which it launched in 2021, the crypto exchange offered customers returns of about 8% for lending their crypto. The high yields were paid by loaning the customers’ funds to Genesis, which then loaned it out to institutional investors. Gemini ended the Earn program on Jan. 8.

Winklevoss claimed in a Jan. 2 letter that DCG owed Genesis $1.675 billion that included money owed to Gemini customers, which he claims DCG instead put toward other parts of the company. Silbert replied in a tweet that day, saying DCG didn’t owe Genesis that amount and that it’s “never missed an interest payment to Genesis and is current on all loans outstanding.”

After FTX collapsed in November, Genesis halted withdrawals, leaving any Gemini Earn customers with no way to redeem their funds.