Exploring the Vision and Impact of Digital Currency Group and its Subsidiaries

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Digital Currency Group (DCG) is a venture capital firm that invests in and builds companies in the digital currency and blockchain space. Founded in 2015 by Barry Silbert, DCG has become a leader in this emerging industry, working to accelerate the development of a more open, accessible, and fair financial system.

DCG’s portfolio includes some of the most well-known names in the digital currency and blockchain space, including Coinbase, Circle, and Chain. The firm has also invested in a number of other companies that are working to bring the benefits of digital currencies and blockchain technology to a wider range of users.

In addition to its investments, DCG also operates a number of subsidiaries that are working to further the adoption and development of digital currencies and blockchain technology. These include Grayscale Investments, which manages a family of investment products that provide exposure to digital currencies, and Genesis, which provides institutional-grade trading and lending services for digital currencies.

Digital Currency Group’s Subsidiaries Include:

1. Genesis Global Capital

Genesis is a cryptocurrency brokerage for institutional investors. It is a subsidiary of Digital Currency Group (DCG).

Genesis filed for Chapter 11 bankruptcy on January 19, 2023 to request court protection to reorganize its cryptocurrency lending businesses.

Genesis Global Capital was founded in 2013. It is a subsidiary of the Digital Currency Group, a venture capital company founded by Barry Silbert.

Genesis is a crypto trading, lending, and asset custody platform, targeting institutional clients and high-net-worth individuals. They claim to have been the first OTC Bitcoin crypto desk, launched in 2013.

Genesis acquired the London-based crypto asset custodian company Volt in early 2020. Grayscale Investments’ crypto assets were held by Xapo, which Coinbase bought in 2019. After the Volt acquisition, Genesis moved its crypto custody from Coinbase to Greyscale.

In early July 2022, Genesis’ parent company Digital Currency Group (DCG) took on some of Genesis’ debts to keep the company afloat after it was left exposed to hundreds of millions of dollars in losses from loans to Singapore-based crypto lender Babel Finance and the bankrupt crypto hedge fund, Three Arrows Capital (3AC).

Former CEO Michael Moro stepped down from his post on August 17, 2022. Genesis COO Derar Islim assumed the role of interim CEO.

In November 2022, the company revealed that it had $2.8 billion in outstanding loans. The company hired investment bank Moelis & Company to assist in restructuring. The options the company was considering at the time included declaring bankruptcy. In the same month, Barron’s reported that Genesis was under investigation by state securities regulators.

On January 12, 2023, the Securities and Exchange Commission charged Genesis Global Capital with the unregistered offer and sale of securities to retail investors through Gemini Trust Company’s Gemini Earn crypto asset lending program. The SEC is seeking permanent injunctive relief, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties against both Gemini and Genesis.

On January 19, 2023, Genesis filed for Chapter 11 bankruptcy protection to reorganize three of Genesis’ holding companies, all involved in the cryptocurrency lending business. Genesis listed over 100,000 creditors with aggregate liabilities in the range of US$1.2–11 billion dollars. The company stated that Genesis’ derivatives and spot trading business were not a part of the bankruptcy filing and continue operating. Entities involved in the bankruptcy are Genesis Global Holdco, LLC, Genesis Global Capital, LLC, and Genesis Asia Pacific Pte. Ltd.

2. Grayscale Investments

Established in 2013, Grayscale Investments is a digital currency asset manager. It offers funds privately for institutional and accredited investors and publicly-traded products. They were the world’s largest asset manager for digital currency, as of December 2021, with more than $50 billion in assets under management at the time. Grayscale also manages the Grayscale Bitcoin Investment Trust (OTCQX: GBTC), which was the first publicly quoted securities solely invested in the price of bitcoin upon its launch in 2013.

As of April 2021, six of Grayscale’s funds were traded publicly on the OTCQX market: the Bitcoin Cash, the Grayscale Bitcoin Trust, the Grayscale Ethereum Trust, the Grayscale Ethereum Classic Trust, the Grayscale Digital Large Cap Fund, and the Grayscale Litecoin Trust.

Grayscale Bitcoin Trust was approved for public trading by the Financial Industry Regulatory Authority in 2015. On January 21, 2020, Grayscale Bitcoin Trust became the first digital currency financial product to become a Securities and Exchange Commission reporting company.

In 2022, Grayscale launched an ETF traded on American, British, Italian, and German exchanges that tracks the Bloomberg Grayscale Future of Finance Index, consisting of a blend of companies, including asset managers, exchanges, brokerages, and cryptocurrency miners. In June 2022, the SEC denied Grayscale’s request to turn GBTC into an exchange-traded fund, citing concerns about the lack of oversight over cryptocurrencies and the risk of price fixing. The denial prompted Grayscale to sue the agency.

As of November 2022, the Grayscale Bitcoin Trust holds one of the largest shares of bitcoin (BTC), with 643,572 BTC, worth about $10.6 billion, approximately 3% of all Bitcoin currently available.

3. CoinDesk

CoinDesk is a global media, research, and events platform that was acquired by Digital Currency Group in 2016. It reports on blockchain’s daily news, provides a Bitcoin Price Index and publishes a quarterly State of Bitcoin report. CoinDesk also hosts a conference on digital currencies and blockchain technologies titled Consensus.

In November 2022, CoinDesk reported that FTX’s partner firm Alameda Research held a significant portion of its assets in FTX’s native token FTT. The news led to a bank run and liquidity crisis at FTX, culminating in FTX filing for bankruptcy protection.

4. Foundry

Foundry, established in 2019, sets up and manages bitcoin mining operations in the United States and Canada. In addition to setting up and operating its own cryptocurrency mining equipment, Foundry also provides financing, specialized digital mining equipment, and expertise to other digital currency startups.

In the summer of 2021, Foundry helped to relocate over $300 million worth of equipment from China to North America following the Chinese government shutting down many cryptocurrency mining operations.

5. Luno

In September 2020 Digital Currency Group acquired Luno, a cryptocurrency exchange based in London, with other operations in Cape Town and Singapore. At the time of the acquisition, Luno had more than 5 million customers.

DCG is also committed to supporting the growth of the wider digital currency and blockchain ecosystem. The firm runs events and conferences to bring together leaders in the industry and promote collaboration and knowledge-sharing. It also works with policymakers and regulators to help ensure that the regulatory environment for digital currencies and blockchain technology is supportive of innovation and growth.

In conclusion, Digital Currency Group is a leading player in the digital currency and blockchain space, working to build the infrastructure and support the companies that are helping to drive this exciting new industry forward. With its investments, subsidiaries, and events, DCG is helping to create a more open, accessible, and fair financial system for everyone.

Repercussions of FTX Bankruptcy

On November 10, 2022, DCG subsidiary Genesis Trading posted to their official Twitter feed that they had lost approximately $175 million dollars in the bankruptcy of FTX caused by the bankruptcy of Bahamas-based cryptocurrency exchange FTX. The company claimed that “This does not impact our market-making activities.” On November 16, 2022, DCG subsidiary Genesis Global Capital suddenly halted all Bitcoin withdrawals and loan applications for their customers. On November 17, 2022, the Wall Street Journal reported that it had obtained confidential documents stating that Genesis was undergoing an “ongoing run on deposits” and a $1 billion emergency loan by the following Monday, November 21.

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