- Digital Currency Group (DCG) owes creditors up to $3 billion through Genesis.
- The firm is exploring the sale of its Venture Capital Portfolio worth about $500 million to offset the deficit.
Genesis, a crypto broker, and a subsidiary of the Digital Currency Group (DCG) owes as much as $3 billion to customers, a harsh reality that has pushed the parent company to consider selling off some assets within its portfolio to cushion the blow of the bogus debt.
DCG and the planned portfolio selloff
As reported by the Financial Times, the selloff being considered by DCG will be pulled from its Venture Capital Holdings which includes as many as 200 crypto-related projects such as exchanges, banks, and custodians in at least 35 countries.
According to sources who spoke to the Financial Times, the amount DCG is projected to raise is about $500 million from the assets it is looking at selling.
Genesis has been a bleeding entity of the Digital Currency Group since the collapse of Three Arrows Capital (3AC), with as much as $447.5 million and 4,550 Bitcoin (BTC) worth $78 million of the company’s funds still hanging with the now bankrupt 3AC, its lump sum of $175 million stuck on the FTX Derivatives Exchange further aggravated the firm’s woes.
As a parent firm, DCG has come to the aid of Genesis on more than one occasion and while it is doing all it can to help alleviate the broker’s woes, it is also owing the firm as much as $1.6 billion. The earliest of the debt DCG owes to Genesis is due around May, and all eyes are on the firm to see if it will default on this payment or not.
While the outlook in the broader crypto industry looks bleak with external funding prospects generally tamed, DCG believes putting up some of its backed firms might be a way to alleviate some of the strain the empire is facing. Some of the solvent companies in its portfolio include ABRA, Acala Network, AVANTI Bank, BitFlyer, and Chainalysis amongst others.
The situation with DCG and Genesis has brought a number of embarrassments, especially as it involves Gemini exchange whom the former is owing $900 million belonging to its Earn Program customers. While Gemini has stopped the Earn program, it is still so determined to get Genesis to make repayments of all that it is owing its users.
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The threat on Bitcoin
Amidst the whole saga, Bitcoin (BTC) is currently overlooking the negative sentiments across the board and has risen 4.61 percent to soar to about $19,018.05 for the first time in more than a month. However, this impressive run is notably under threat as the distress on DCG and Genesis may also spill over to Grayscale Investments, another subsidiary of the company that directly invests in Bitcoin.
Should the contagion of the current liquidity crunch spill to Grayscale, as many as 635,000 Bitcoin units linked to the DCG empire will be under threat, and the industry is bound to respond to this threat in the near future.