Company:Digital Currency Group

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Short description: American venture capital company
Digital Currency Group Inc.
TypePrivately held company
IndustryAsset management
Founded2015; 9 years ago (2015)
FounderBarry Silbert
HeadquartersStamford, Connecticut
Area served
Worldwide
Key people
Barry Silbert (CEO)
Mark Shifke (CFO)
ProductsInvestment funds
AUM$50 billion (Sept. 2021)[1]
Subsidiaries
Websitedcg.co

Digital Currency Group (DCG) is a venture capital company focusing on the digital currency market. It is located in Stamford, Connecticut.[2] The company has the subsidiaries Foundry, Genesis, Grayscale Investments, and Luno. It also formerly owned CoinDesk.

History

Founding and growth: 2015-2021

Digital Currency Group was launched in 2015 by Barry Silbert, the former CEO of SecondMarket, Inc. He began investing in blockchain technology companies in 2013.[3] Shortly after SecondMarket’s sale, Silbert formed Digital Currency Group, with Genesis and Grayscale becoming the first of the company’s subsidiaries.[4]

In November 2021, the firm relocated its Manhattan headquarters to Stamford, Connecticut.[5][6] The governor of Connecticut at the time, Ned Lamont, had provided financial incentives for the company to move to Stamford, including a $5 million grant if Digital Currency Group created at least 300 full-time jobs in the state.[7]

As of November 2021, Digital Currency Group made over 200 investments in other cryptocurrency companies.[8]

Repercussions of FTX bankruptcy: 2022

Genesis and sales: 2023

By early 2023, DCG had over 160 companies in its portfolio, of which it had acquired 28. Subsidiaries included the crypto exchange Luno, and the firm Foundry for crypto mining. It was also an investor in Coinbase and Kraken, the firm Circle behind the stablecoin USDC, and the analytics companies Chainalysis, Dune Analytics, Elliptic, and Etherscan.[9] In early January 2023, DCG laid off 30% of its staff. In response to growing dispute with shareholders, Barry Silbert in early 2023 argued against debtor Cameron Winklevoss' push to replace him as CEO.[10]

In January 2023, the Financial Times reported that DCG was considering selling parts of its venture capital holdings to raise funds.[11]

On January 19, 2023, Genesis Global Capital filed for Chapter 11 bankruptcy protection, citing over 100,000 creditors and liabilities of between $1 billion and $10 billion.[12] In February 2023, DCG struck a deal with creditors to either sell its Genesis unit or turn its equity over to creditors.[13] Specifically, on February 6, 2023, Genesis Global Holdco announced a possible agreement with its creditors and DCG, wherein DCG would give its equity interest in Genesis Global Trading (GGT) to Genesis Global Holdco. DCG would also refinance its loans from Genesis and exchange its existing $1.1 billion promissory note for convertible preferred stock issued by DCG.[14][15] However in April, some creditors walked away from the restructuring agreement.[13]

In mid-May 2023, it was reported that DCG had missed a $630 million payment to Gemini, while owing the company $1.65 billion.[16][17]

DCG stated that "due to the state of the broader economy and prolonged crypto winter, along with the challenging regulatory environment for digital assets in the U.S," it shut down TradeBlock, an institutional trading platform, on May 31, 2023.[6][18] At that time, Luno was still owned by DCG.[19] In July 2023, it was reported that DCG would sell CoinDesk for $125 million. At the time, DCG had closed HQ, its wealth management unit.[20] With Barry Silbert remaining CEO, in July 2023, DCG appointed Mark Shifke as its CFO.[21]

In July 2023, DCG's crypto lending arm Genesis Global was still undergoing bankruptcy proceedings.[20] In July 2023, Gemini sued DCG in New York citing fraud, with the intent of reclaiming funds.[22] In August 2023 DCG reportedly faced an unannounced probe by the New York Attorney General, who was seeking information related to the financial dealings of DCG's subsidiary Genesis.[23]

A new Chapter 11 deal was agreed on with DCG and lender Genesis Global as well as a major creditor group in late August 2023.[24][25] The agreement involved paying out up to 90% of the amount owed to Genesis customers using new loans.[26]

In October 2023, the New York attorney general filed a lawsuit against DCG, Gemini Trust, and Genesis Capital for allegedly defrauding more than 230,000 investors of more than $1.1 billion. The companies allegedly lied to investors about the expected returns on their investments and in regard to their safety, while also concealing losses from them and the public. DCG replied that they would fight the claims, and that they were “shocked by the baseless allegations.”[27][28]

Subsidiaries

Genesis Global Capital

Launched in 2013 by DCG, Genesis is a cryptocurrency trading, lending, and asset custody platform, targeting institutional clients and high net worth individuals. They claim to have been the first Bitcoin cryptocurrency desk.[29]

Genesis acquired the London-based cryptocurrency custodial company Volt in early 2020. Genesis' sister company Grayscale Investments had been holding its cryptocurrency assets with the company Xapo, which had been acquired by Genesis' rival Bitcoin trading company Coinbase in 2019. News media speculated that Genesis' cryptocurrency custody would be transferred away from Coinbase and made internal to Greyscale after completion of the Volt acquisition.[30]

In late June and early July 2022, Genesis publicly disclosed that it was exposed to hundreds of millions of dollars in losses from loans to both the Hong Kong based cryptocurrency lender Babel Finance[citation needed] and the bankrupt cryptocurrency hedge fund Three Arrows Capital (3AC),[31] and that its parent company DCG had taken on some of Genesis' debts in order to keep the company afloat.[32][31] On August 17, 2022, Genesis CEO Michael Moro resigned[31] to serve in an advisory position, while Chief Operating Officer (COO) Derar Islim became interim CEO.[31] On November 1, 2022, it was reported that Mark Murphy had been promoted from DCG's COO to president and had dismissed 10% of the DCG staff.[33] On November 16, Genesis abruptly halted all Bitcoin withdrawals and loan applications for their customers,[34][9] following FTX's bankruptcy filing.[35] The next morning, Wall Street Journal reported that it had obtained confidential documents stating that Genesis had an "ongoing run on deposits".[34][36]

On January 19, 2023, Genesis Global Capital filed for Chapter 11 bankruptcy protection.[12][37] with the unit continuing to undergo proceedings through 2023.[15]

Grayscale Investments

Main page: Company:Grayscale Investments

Established in 2013, Grayscale Investments is a digital currency asset manager.[38] It offers funds privately for institutional and accredited investors[39] and publicly-traded products.[40]

Grayscale was the world’s largest asset manager for digital currency, as of December 2021, with more than $50 billion in assets under management.[7] Grayscale also manages the Grayscale Bitcoin Investment Trust (OTCQX: GBTC), which was the first publicly quoted security solely invested in the price of bitcoin upon its launch in 2013.[3]

As of April 2021, six of Grayscale’s funds were traded publicly on the OTCQX market: Bitcoin Cash, Grayscale Bitcoin Trust, Grayscale Ethereum Trust, Grayscale Ethereum Classic Trust, Grayscale Digital Large Cap Fund, and the Grayscale Litecoin Trust.[41]

Grayscale Bitcoin Trust was approved for public trading by the U.S. Financial Industry Regulatory Authority (FINRA) in 2015.[42][43] On January 21, 2020, Grayscale Bitcoin Trust became the first digital currency financial product to become a Securities and Exchange Commission reporting company.[44]

In 2018, Grayscale launched the Grayscale Digital Large Cap Fund which allows a customer to invest in a group of prominent digital currencies.[45] The fund was approved to trade on public markets by the FINRA in October 2019.[citation needed] In May 2022, it was reported that Grayscale would list an exchange-traded fund (ETF) for the first time in Europe. The ETF was said to be made up of companies representing the "Future of Finance", and would begin trading on May 17.[38]

CoinDesk

Main page: Finance:CoinDesk

CoinDesk is a global media, research, and events platform that was acquired by Digital Currency Group in 2016.[46] It reports on bitcoin blockchain 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 named Consensus.[47]

Foundry

Foundry, established in 2019, sets up and manages bitcoin mining operations in the United States and Canada.[48] 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.[49]

In the summer of 2021, Foundry helped to relocate over $300 million worth of equipment from China to North America following the Chinese government shutdown of many cryptocurrency mining operations.[50]

Bloomberg reported in April 2023 that Foundry would stop offering free Bitcoin mining services, and between April 19 and April 22, would instead levy a pool fee on members. The services had been free since 2019. [51]

Luno

In September 2020, Digital Currency Group acquired Luno, a cryptocurrency exchange based in London, with other operations in Cape Town and Singapore.[52][53] At the time of the acquisition, Luno had more than 5 million customers.[52]

See also

References

  1. ↑ Ehrlich, Steven. "Grayscale Paves The Way For Ethereum Classic, Bitcoin Cash And Litecoin ETFs While The Fate Of Bitcoin's First Lies In The Balance" (in en). https://www.forbes.com/sites/stevenehrlich/2021/09/10/grayscale-paves-the-way-for-ethereum-classic-bitcoin-cash-and-litecoin-etfs-while-the-fate-of-bitcoins-first-lies-in-the-balance/. 
  2. ↑ Vigna, Paul (2016-04-28). "Bitcoin-Focused Investment Firm Brings On Western Union, Lawrence Summers". Wall Street Journal. ISSN 0099-9660. https://www.wsj.com/articles/bitcoin-focused-investment-firm-brings-on-western-union-lawrence-summers-1461855562. 
  3. ↑ 3.0 3.1 Primack, Dan (23 September 2013). "First Bitcoin Investment Fund Launches". http://fortune.com/2013/09/26/first-bitcoin-investment-fund-launches/. Retrieved 29 March 2019. 
  4. ↑ Tepper, Fitz (27 October 2015). "Barry Silbert Launches Digital Currency Group With Funding From MasterCard, Others". TechCrunch. https://techcrunch.com/2015/10/27/barry-silbert-launches-digital-currency-group-with-funding-from-mastercard-others/. Retrieved 18 April 2019. 
  5. ↑ Hall, Phil. "Blockchain behemoth DCG relocating to Stamford from NYC". Westfair Online. https://westfaironline.com/143038/blockchain-behemoth-dcg-relocating-to-stamford-from-nyc/. Retrieved 3 December 2021. 
  6. ↑ 6.0 6.1 "Stamford-based crypto conglomerate Digital Currency Group closes another business". https://www.ctinsider.com/business/article/digital-currency-group-closes-trading-business-18125478.php. 
  7. ↑ 7.0 7.1 "With a cryptocurrency company's move to Stamford, Gov. Lamont and business leaders say it's a sign of change for Connecticut". 2 December 2021. https://www.courant.com/politics/hc-pol-economic-summit-optimism-bitcoin-20211202-7uud734qkvawpndvsywz7otfta-story.html. 
  8. ↑ Vigna, Paul (2021-11-01). "WSJ News Exclusive | Digital Currency Group Wants to Be Crypto's Standard Oil" (in en-US). Wall Street Journal. ISSN 0099-9660. https://www.wsj.com/articles/digital-currency-group-wants-to-be-cryptos-standard-oil-11635764400. 
  9. ↑ 9.0 9.1 "Factbox: FACTBOX The many companies in Digital Currency Group's crypto empire". Reuters. https://www.reuters.com/business/finance/many-companies-digital-currency-groups-crypto-empire-2023-01-12/. 
  10. ↑ "Chief of Digital Currency Group defends record amid call for sacking - Barry Silbert writes to shareholders as Gemini exchange’s Cameron Winklevoss seeks his removal". Financial Times. https://www.ft.com/content/4d211526-c395-4378-bd5a-dbe653b64fc1. 
  11. ↑ "DCG's crypto broker Genesis owes creditors more than $3 bln - source". Reuters. https://www.reuters.com/business/finance/dcgs-crypto-broker-genesis-owes-creditors-more-than-3-bln-ft-2023-01-12/. 
  12. ↑ 12.0 12.1 "Crypto giant Genesis files for bankruptcy, after FTX collapse" (in en). https://www.aljazeera.com/economy/2023/1/20/crypto-giant-genesis-files-for-bankruptcy-after-ftx-collapse. 
  13. ↑ 13.0 13.1 "Crypto group DCG says bankrupt unit Genesis' creditors renege on deal". Reuters. https://www.reuters.com/technology/crypto-group-dcg-says-bankrupt-unit-genesis-creditors-renege-deal-2023-04-25/. 
  14. ↑ "Genesis Reaches Agreement in Principle with DCG and Key Creditors on a Global Resolution that Optimizes Outcome for Clients and Stakeholders" (in en). 6 February 2023. https://www.businesswire.com/news/home/20230206005640/en/Genesis-Reaches-Agreement-in-Principle-with-DCG-and-Key-Creditors-on-a-Global-Resolution-that-Optimizes-Outcome-for-Clients-and-Stakeholders. 
  15. ↑ 15.0 15.1 Sigalos, MacKenzie; Goswami, Rohan. "Winklevoss twins' crypto exchange Gemini to contribute $100 million to Genesis bankruptcy recovery" (in en). https://www.cnbc.com/2023/02/06/gemini-to-contribute-100-million-to-genesis-bankruptcy-recovery-plan.html. 
  16. ↑ "Gemini Pressures Digital Currency Group As Clock Runs Out On Genesis Loan". Forbes. https://www.forbes.com/sites/emilymason/2023/05/22/gemini-pressures-digital-currency-group-as-clock-runs-out-on-genesis-loan/?sh=761409612af8. 
  17. ↑ "Gemini says Digital Currency Group missed loan payment". Axios. https://www.axios.com/2023/05/22/gemini-says-digital-currency-group-missed-loan-payment. 
  18. ↑ "Digital Currency Group Closes TradeBlock Institutional Trading Platform". Bloomberg News. https://www.bloomberg.com/news/articles/2023-05-25/digital-currency-group-closes-tradeblock-institutional-platform. 
  19. ↑ "Crypto exchange owned by embattled conglomerate Digital Currency Group loses top global exec". CNBC. https://www.cnbc.com/2023/05/02/dcg-owned-crypto-exchange-luno-loses-top-global-exec-as-woes-mount.html. 
  20. ↑ 20.0 20.1 "CoinDesk to be sold in $125 million deal". Axios. https://www.axios.com/2023/07/20/coindesk-matthew-roszak-125-million. 
  21. ↑ "Barry Silbert’s Digital Currency Group Names Shifke as CFO". Bloomberg. https://www.bloomberg.com/news/articles/2023-07-31/barry-silbert-s-digital-currency-group-names-mark-shifke-as-cfo. 
  22. ↑ "Winklevoss Twins’ Gemini Sues Crypto Conglomerate DCG, Citing Fraud". Bloomberg News. https://www.bloomberg.com/news/articles/2023-07-07/winklevoss-s-gemini-crypto-exchange-sues-barry-silbert-and-dcg#xj4y7vzkg. 
  23. ↑ "DCG Probes Grow as NY Attorney General Seeks Genesis Information". Bloomberg. https://news.bloomberglaw.com/litigation/dcg-probes-grow-as-ny-attorney-general-seeks-genesis-information. 
  24. ↑ "Genesis Creditors Forge New Chapter 11 Deal With Parent Digital Currency Group". Wall Street Journal. https://www.wsj.com/articles/genesis-creditors-forge-new-chapter-11-deal-with-parent-digital-currency-group-6bb209ba. 
  25. ↑ "Genesis, DCG reach in-principle deal with creditors - court filing". Reuters. https://www.reuters.com/business/finance/dcg-reaches-principle-deal-with-genesis-creditors-coindesk-2023-08-29/. 
  26. ↑ "Digital Currency Group could pay back nearly all money owed to Genesis customers if new agreement approved". Fortune. https://fortune.com/crypto/2023/08/29/digital-currency-group-dcg-genesis-repaying-customers/. 
  27. ↑ Asgari, Nikou (2023-10-19). "New York sues Digital Currency Group, Gemini and Genesis over alleged $1.1bn crypto fraud". Financial Times. https://www.ft.com/content/b91e8df4-10a9-4a5b-be39-29e1c2e345d1. 
  28. ↑ Livni, Ephrat (2023-10-19). "New York Attorney General Sues Crypto Firms in $1 Billion Fraud Case". New York Times. https://www.nytimes.com/2023/10/19/business/cryptocurrency-lawsuit-new-york-winklevoss.html. 
  29. ↑ ""About Our Company - Genesis Global Trading, Inc"". genesistrading.com. https://genesistrading.com/about/. 
  30. ↑ Roberts, Jeff John. "Genesis expands crypto footprint with custody acquisition". Fortune.com. https://fortune.com/2020/05/21/genesis-cryptocurrency-vo1t-bitcoin/. 
  31. ↑ 31.0 31.1 31.2 31.3  , Wikidata Q115175426
  32. ↑ Yang, Yueqi (6 July 2022). "Crypto Lender Genesis Confirms Exposure to Bankrupt Three Arrows Capital". Bloomberg.com (Bloomberg). https://www.bloomberg.com/news/articles/2022-07-06/crypto-lender-genesis-confirms-exposure-to-three-arrows-capital. 
  33. ↑ "Digital Currency Group Names Murphy President, Cuts 10% of Staff". Bloomberg News. https://www.bloomberg.com/news/articles/2022-11-01/crypto-firm-digital-currency-group-dcg-to-cut-staff-by-about-10. 
  34. ↑ 34.0 34.1 Kiernan, Paul (17 November 2022). "Crypto Lender Genesis Had Sought Emergency Loan of $1 Billion". The Wall Street Journal. https://www.wsj.com/livecoverage/stock-market-news-today-11-17-2022/card/crypto-lender-genesis-sought-emergency-loan-of-1-billion-by-monday-573TThK17Ke15FYwJzLR. 
  35. ↑ John, Alun; Lang, Hannah (2022-11-11). "Crypto exchange FTX files for bankruptcy as wunderkind CEO exits" (in en). Reuters. https://www.reuters.com/business/ftx-start-us-bankruptcy-proceedings-ceo-exit-2022-11-11/. 
  36. ↑  , Wikidata Q115366290
  37. ↑ "Genesis Global Holdco, LLC". Kroll. https://restructuring.ra.kroll.com/genesis/. 
  38. ↑ 38.0 38.1 Howcroft, Elizabeth (2022-05-16). "Grayscale to launch digital assets ETF in UK, Italy, Germany" (in en). Reuters. https://www.reuters.com/business/finance/grayscale-launch-digital-assets-etf-uk-italy-germany-2022-05-16/. 
  39. ↑ Rooney, Kate (1 November 2018). "Crypto investment firm Grayscale rakes in $330 million this year despite bitcoin bear market". CNBC. https://www.cnbc.com/2018/11/01/crypto-investment-firm-grayscale-rakes-in-330-million-this-year.html. Retrieved 30 June 2020. 
  40. ↑ Salzman, Avi (15 October 2019). "New Cryptocurrency Fund Finds a Side Door Into Your Brokerage Account". Barron's. https://www.barrons.com/articles/new-cryptocurrency-fund-bitcoin-brokerage-account-51571152229. Retrieved 25 June 2020. 
  41. ↑ Paz, Javier. "Will Grayscale Plan To Convert GBTC To A Bitcoin ETF Work?" (in en). https://www.forbes.com/sites/javierpaz/2021/04/08/will-grayscale-plan-to-convert-gbtc-to-a-bitcoin-etf-work/. 
  42. ↑ Casey, Michael J. (1 March 2015). "BIT Poised to Become Publicly Traded Bitcoin Fund". Wall Street Journal. https://www.wsj.com/articles/bitcoin-investment-trust-gets-finras-ok-to-become-public-bitcoin-fund-1425242094. 
  43. ↑ Salzman, Avi (3 July 2017). "Bitcoin and Beyond". Barron's 97 (27): 17–20. 
  44. ↑ Castillo, Michael del. "20 Institutional Bitcoin Investors Revealed, But Soon The List May Vanish" (in en). https://www.forbes.com/sites/michaeldelcastillo/2020/08/06/valuable-sec-data-on-20-institutional-bitcoin-investors-could-soon-disappear/. 
  45. ↑ Roberts, Daniel (7 February 2018). "Exclusive: Grayscale launches new 'Digital Large Cap Fund' tied to 5 top cryptocurrencies". Yahoo Finance. https://finance.yahoo.com/news/exclusive-grayscale-launches-new-digital-large-cap-fund-tied-bitcoin-ether-ripple-litecoin-160507615.html. Retrieved 25 June 2020. 
  46. ↑ Matney, Lucas (13 January 2016). "CoinDesk Gets Acquired By Digital Currency Group". https://techcrunch.com/2016/01/13/coindesk-acquired-by-digital-currency-group/. 
  47. ↑ Roberts, Daniel (4 May 2016). "The 5 biggest bitcoin and blockchain announcements at Consensus". Yahoo Finance. https://finance.yahoo.com/news/the-biggest-bitcoin-and-blockchain-news-announcements-at-consensus-conference-2016-chain-21-delaware-craig-wright-032242815.html. Retrieved 10 May 2016. 
  48. ↑ "Crypto giant DCG bets $100M to mine Bitcoin in North America" (in en). https://fortune.com/2020/08/27/bitcoin-mining-dcg-foundry-north-america-btc/. 
  49. ↑ Robertson, Harry. "Bitcoin mining can be a 'bridge' to a renewable energy future by supporting green projects, a leading North American miner says" (in en-US). https://markets.businessinsider.com/currencies/news/bitcoin-btc-energy-use-mining-climate-environment-cyrptocurrencies-foundry-2021-3-1030229621. 
  50. ↑ Sigalos, MacKenzie. "It just got harder and less profitable to mine for bitcoin as algorithm adjusts" (in en). https://www.cnbc.com/2021/08/12/bitcoin-mining-becomes-more-difficult-as-algorithm-adjusts.html. 
  51. ↑ "DCG's Bitcoin Mining Firm Foundry to Stop Offering Free Services". Bloomberg News. https://www.bloomberg.com/news/articles/2023-04-06/dcg-s-bitcoin-mining-firm-foundry-to-stop-offering-free-services?sref=xlHcxOOx. 
  52. ↑ 52.0 52.1 "Naspers-Backed Crypto Luno Acquired by Digital Currency Group" (in en). Bloomberg.com. 2020-09-09. https://www.bloomberg.com/news/articles/2020-09-09/dcg-buys-bitcoin-frontier-exchange-luno-from-naspers-rmih-kevb7jqb. 
  53. ↑ "Bitcoin Price Pump Movement Grows Ahead of El Salvador's Adoption" (in en). Bloomberg.com. 2021-09-06. https://www.bloomberg.com/news/articles/2021-09-06/bitcoin-price-pump-is-brewing-for-el-salvador-s-sept-7-rollout. 

External links



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