(Kitco News) - Digital Currency Group (DCG) founder and CEO Barry Silbert addressed shareholders on Tuesday, looking to reassure them that the company remains on solid footing and will emerge from the crypto winter even stronger despite the highly publicized struggles of some of its biggest investments.
As previously reported by Kitco Crypto, the DCG is one of the most prominent organizations in the world of crypto and is the owner of Grayscale Investments and the embattled crypto lender Genesis Trading.
With rumors spreading that Genesis faces possible bankruptcy, Silbert sent a letter to shareholders on Tuesday updating them on the current situation.
“DCG will continue to be a leading builder of the industry and we are committed to our long-term mission of accelerating the development of a better financial system,” he wrote in the letter. “We have weathered previous crypto winters and while this one may feel more severe, collectively we will come out of it stronger.”
Silbert acknowledged that Genesis Global Capital had to temporarily suspend redemptions and new loan originations on Nov. 16 following a spike in volatility that was initiated by a surge in withdrawal requests.
“This is an issue of liquidity and duration mismatch in the Genesis loan book. Importantly, these issues have no impact on Genesis’ spot and derivatives trading or custody businesses, which continue to operate as usual,” the CEO stated.
The board of directors of Genesis decided to hire financial and legal advisors to navigate the current difficulties following the implosion of FTX, according to Silbert. He also sought to calm fears of a potential misappropriation of company funds similar to what happened between FTX and Alameda.
“For those unaware, in the ordinary course of business, DCG has borrowed money from Genesis Global Capital in the same vein as hundreds of crypto investment firms,” the CEO stated. “These loans were always structured on an arm’s length basis and priced at prevailing market interest rates. DCG currently has a liability to Genesis Global Capital of ~$575 million, which is due in May 2023.”
Silbert went on to add that the money from these loans was used to fund various investment opportunities as well as to “repurchase DCG stock from non-employee shareholders in secondary transactions.”
The CEO also noted that while the organization does not currently have a financing round planned, the DCG appreciates the offers to invest that it has received in recent days and will announce any future funding rounds as they arise.
"Despite the difficult industry conditions, I am as excited as ever about the potential for cryptocurrencies and blockchain technology over the coming decades and DCG is determined to remain at the forefront,” he concluded.
