DCG records over $1b loss in 2022 amid crypto collapses

Digital Currency Group (DCG), a venture capital conglomerate with subsidiaries including Genesis and crypto news publication Coindesk, recorded over $1 billion loss in 2022, majorly as a result of Three Arrows Capital’s collapse which impacted Genesis. 

According to the report by DCG-owned media Coindesk, the crypto conglomerate’s full-year revenue stood at $719 million, while revenue in the fourth quarter was $143 million, with a loss of $24 million. Also, total assets at the end of 2022 were valued at $5.3 billion, which included cash and cash equivalent worth $262 million, while investments in venture and funds, tokens, and shares in Grayscale trusts, totaled $670 million. The remaining assets are held by Grayscale and cryptocurrency mining and staking business Foundry. 

However, DCG recorded a $1.1 billion loss in 2022. Part of the reason for the loss was a result of crypto hedge fund Three Arrows Capital’s (3AC) failure to repay its loan to Genesis Global Trading. Following the collapse of Three Arrows Capital, it was revealed that Genesis was the insolvent hedge fund’s biggest lender after lending 3AC $2.36 billion in undercollateralized loans. 

In June, Genesis stated that the company suffered losses worth millions of dollars following its exposure to 3AC. DCG also blamed its losses on the crypto winter that has seen a decline in the prices of bitcoin and other cryptocurrencies.

Furthermore, DCG’s equity valuation stood at $2.2 billion, representing a price per share of $27.93, with the report stating that “this appraisal is generally consistent with the sector’s 75%-85% decline in equity values over the same period.” 

However, DCG claimed to reach a milestone in Genesis restructuring referring to an agreement reached with some major creditors. As part of the agreement, DCG intends to exchange its $1.1 billion promissory note which will mature in 2032, for “redeemable, convertible stock” to Genesis Capital creditors. 

Also, the agreement includes the extension of the due date of DCG’s obligations from May 2023 to June 2024. The conglomerate was expected to pay Genesis $600 million by May 2023. DCG is further planning to hand over its equity stake in Genesis Global Trading to Genesis Global Holdco, and eventually sell both entities to settle creditors. 

DCG has come under fire in recent times, with CEO Barry Silbert, being asked to step down from his position. As previously reported by crypto.news, a group of Genesis creditors slapped DCG and Silbert with a securities lawsuit, alleging that they both contravened securities laws.