In Search of Cash, DCG Looks to $500M Venture Capital Portfolio: Report

Blockworks January 12, 2023
Updated 2023/01/12 at 3:44 PM
4 Min Read
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Digital Currency Group (DCG) is reportedly looking to sell some of its venture capital holdings to raise capital after affiliate Genesis was among those who took a major hit during last year’s market turmoil.

The company’s venture capital investments are illiquid and would likely take time to sell, the Financial Times reported. The publication cited people familiar with the matter.

DCG is the parent company of crypto lending firm Genesis, asset manager Grayscale Investments, and media company CoinDesk, among others. Its venture portfolio comprises more than 160 companies, according to its website.

The portfolio includes exchanges, banks and custodians — such as industry stalwarts Coinbase and Kraken — and is worth about $500 million, according to Financial Times.

Other well-known names in the portfolio include Circle, The Graph, Ripple, Silvergate, Paradigm, Lightning Network, Fireblocks, eToro, Dune Analytics, Decentraland, Dapper Labs, Chainalysis, Avanti Bank and Abra.

The company had made a $250,000 equity investment in now-bankrupt FTX in July 2021. A DCG spokesperson declined to comment.

Though capital invested in crypto companies slowed in the second half of 2022 amid an ongoing crypto winter, DCG more recently became an investor in decentralized interest rate protocol MetaStreet. It co-led a $5 million funding round for cryptoasset management platform Arch that same month.

The report comes after Gemini co-founder Cameron Winklevoss has accused DCG CEO Barry Silbert and Genesis of “false statements and misrepresentations” about Genesis’s solvency and financial health. Winklevoss said those statements harmed 340,000 users of Gemini’s lending product, Earn, which the firm wound down earlier this week.

“They did so in an effort to mislead lenders into believing that DCG had absorbed massive losses that Genesis incurred from the Three Arrows Capital (3AC) collapse and induce lenders to continue making loans to Genesis,” Winklevoss wrote in a Tuesday letter.

The letter claimed that Genesis lent nearly $2.4 billion to Singapore-based hedge fund 3AC, which filed for bankruptcy in the middle of last year. Winklevoss said last week DCG owes Genesis nearly $1.7 billion — money it needs to fulfill Gemini’s Earn product and other creditors.

Silbert said in his own letter Tuesday that DCG assumed liabilities related to the 3AC crash by issuing to Genesis a $1.1 billion promissory note, which matures in 2032.

A DCG spokesperson called Winklevoss’s letter “another desperate and unconstructive publicity stunt.”

“We are preserving all legal remedies in response to these malicious, false, and defamatory attacks,” the representative told Blockworks in an email. “DCG will continue to engage in productive dialogue with Genesis and its creditors with the goal of arriving at a solution that works for all parties.”

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