In a letter to shareholders sent to investors on Tuesday, Digital Currency Group CEO Barry Silbert outlined the company’s credit situation. Most importantly, the letter reveals that Digital Currency Group’s subsidiary, Genesis Global Capital, has lent more than half a billion dollars to DCG itself.
– DCG currently has liabilities to Genesis Global Capital of $575 million, due in May 2023 – wrote Silbert.
The financial relationship between the two companies has already been controversial. Genesis halted withdrawals on November 16. The company sought an emergency loan of $1 billion in the days leading up to that decision but ultimately failed to secure the requested funds.
In the letter to shareholders, Silbert acknowledged that there had been ‘whispers’ about inter-company loans but stated that these loans were made in the ordinary course of business. He concluded that DCG borrowed money from Genesis in the same manner as hundreds of crypto investment firms.
The letter also notes that there is a promissory note in the amount of $1.1 billion. This promissory note is related to the collapse of Three Arrows Capital (3AC) and is due in June 2023. Silbert explains that DCG stepped in and took on certain obligations from Genesis after the collapse of 3AC and is now involved in liquidation proceedings.
In news from Monday, it was indicated that Genesis could file for bankruptcy if it does not raise funds. The company explicitly denied those reports on the same day and stated that it does not plan to file for bankruptcy anytime soon.
Yesterday, Silbert attempted to further reassure clients that DCG and its subsidiaries remain stable. He wrote that DCG has weathered previous crypto winters and will emerge stronger from this one. He states that DCG has raised $25 million in capital and expects to generate $800 million in revenue this year.
However, the future of the company is unclear, given the ongoing financial turmoil affecting the crypto market.
