DCG’s subsidiary Genesis might soon file bankruptcy and is reportedly in talks with creditors, according to a Bloomberg report.
The development follows after its parent firm Digital Currency Group [DCG]informed its shareholders of suspending dividends until further notice. In a letter sent to its shareholders on 18 Jan., the venture firm stated,
In response to the current market environment, DCG has been focused on strengthening our balance sheet by reducing operating expenses and preserving liquidity. As such, we have made the decision to suspend DCG’s quarterly dividend distribution until further notice.
Crypto conglomerate DCG has found itself in a tough financial spot at its once-prolific lending platform Genesis. Barry Silbert, the business’s owner, has been engaged in negotiations with billionaires Cameron and Tyler Winklevoss.
The duo-led crypto exchange Gemini offered a lending product that fell apart because Genesis, its partner, suspended customer withdrawals.
Back in November, Genesis halted withdrawals following the collapse of the crypto exchange FTX. And the platformoweshigh-yield savings product Gemini Earn $900 million.
According to reports, Genesis has $175 million of its assets locked in the bankrupt FTX. and is estimated to owe creditors $3 billion.
Genesis’ Assets To Get Diluted
As its parent business Digital Currency Group came under increasing pressure, the CEO of the cryptocurrency broker asked for more time to sort out its problematic lending operation.
Both Gemini and Genesis were recently involved in a bitter public showdown after the former co-founder Cameron Winklevoss issued an open letter to DCG CEO Barry Silbert accusing him of “bad faith stall tactics.”
He claimed his firm has tried to work out a solution to getting the cash back but was unsuccessful, as reported by TronWeekly.
That said, the exact implication of a Genesis bankruptcy filing on DCG investors is now unknown, but at the very least, they will witness a diluting of their interests, according to a story in The Information.
SoftBank, one of the investors in DCG, wiped off a $100 million interest in the defunct FTX in November. Others include the CapitalG growth fund from Alphabet, Bain Capital, and Ribbit Capital.
In addition, DCG-owned crypto media outlet CoinDesk confirmed with Bloomberg that it is exploring options of partial or full sale with New York-based Lazard as a financial adviser.