35 Burst results for "DCG"
The Breakdown
Crypto Chaos Fallout: Big Market Makers Pulling Out
"This week has seen a lot of interesting fallouts and consequences of last year's crypto chaos. For example, SPF resurfaced with the request to the judge in his case to throw out 7 of the charges he's accused of. I'm reminded of the line from dodgeball. It's a bold move cotton. Let's see how it works out for him. On top of that, one of 2020 twos last institutional hanging chads in DCG is in a murky situation as it goes into mediation around genesis debt payments that come do this month. Then there are the reports that big market makers like Jane street and jump are pulling away from the crypto markets after finding themselves facing intense above the surface and likely behind the scenes political pressure. We will be discussing all of this this week, but today is inflation day and so we're going to take a quick detour into the macro. Now to give a sense of where we are. Last week at the FOMC meeting, we got what some folks described as a hawkish pause. Obviously the headliner was that the fed raised rates, it raised them another 25 basis points, and this happened even in the face of the collapse of first republic bank, which was seized on the Monday of FOMC week. Now, for those who have been paying attention, it wasn't all that surprising, given what Powell and the fed's posture has been. They have said since the beginning of this tightening cycle that they had the tools to deal with problems that arise from tightening quickly. They basically said that they could handle financial stability and the fight against inflation at the same time and that the interest rate wasn't really their tool when it came to financial stability. Indeed, what we saw around the time of Silicon Valley bank is that the fed in addition to using its existing tools created a new tool in the bank term funding program. The idea of the BTF P remember was to give banks whose loans were underwater, the chance to borrow against the full value of those loans if they were held to maturity rather than having to sell them at a loss to provide for liquidity when customers tried to withdraw.
Unchained
$630M Due Next Week: Is DCG at Default Risk?
"Today's best is ram alu walia, CEO and founder of luma wealth. Welcome rom. Thanks for having me, Lori. Good to see you again. On April 25th, DCG announced via a statement on Twitter that a subset of genesis capital creditors have walked away two months after what they call a comprehensive settlement was submitted to the bankruptcy court. I spoke to a genesis creditor who is in this group and they said they felt that this was mischaracterized that the two sides didn't have an agreement, but just a framework for what a deal could be. This person also said that this framework had been made with limited financial information and that the group revised the terms based on new information and analysis. Either way, genesis requested a mediator to help resolve the issue. Meanwhile, DCG owes genesis $630 million next week. So what do all these recent developments mean for genesis and DCG? Well, it's an unfortunate mess. So at the outset of the petition, the council presenting BCG and genesis as well as the creditors informed the judge they expect a speedy resolution because they've been working at this. And this is a step back. There was a term sheet that was published that outlined the key terms of the deal. It was a framework for the deal. As you mentioned, the ad hoc clitoral group has pulled back or walked away from that. As you said, due to new information, there's a lot tongue packing what information the Lawrence as well as still what significant information is outstanding.
What Bitcoin Did
Grayscale, The SEC & Genesis With Michael Sonnenshein
"Michael is the CEO of grayscale who are part of the digital currency group, and therefore they are intrinsically linked to genesis trading who halted withdrawals in November last year and filed for chapter 11 bankruptcy on January the 20th. Now, genesis had massive losses on their loan book due to exposure to the likes of three AC and Babel finance and they halted withdrawals which impacted both genesis and Gemini earned customers. They've been a lot of questions flying around regarding the relationship between genesis and grayscale, the nature of the loans offered and who knew what about the allegations of three AC being offered billions of dollars in un collateralized loans used to acquire shares in GBTC. And the reason these trays are really important is that there was a period in time where the shares in GBTC were trading in a premium and if you held onto those shares for 6 months out through the lockup, you could then sell them on the open market for a profit. It was quite a good trade for those took advantage of it for the period existed. Now, the problem was when the premium closed and the nav went negative, the likes at three AC were left holding masses of underwater GBTC in turn exposing genesis to bad loans on their books. And this is what led to genesis Houghton withdrawals as they couldn't honor all redemptions. You should also be aware that there are now SEC and DoJ investigations into transfers between genesis and their parent group DCG. Now, when mean Danny headed out to New York, Danny wanted to talk to Michael, but I told him look forget it. There is no chance Michael's going to come on the show. But strangely, their PR team reached out to us and asked him to come to the show. So obviously we jumped at the chance, and in preparing for this interview, I came to the conclusion that Michael was on somewhat of a PR tour following public discussions of a shareholder revolt which could see the trust unwound. Now, grayscale is the golden goose of DCG, commanding fees in the hundreds of millions of dollars per year for managing the trust. And grace go on Michael have been at pains to tell everyone how they are suing the SEC to convert the trust into an ETF, which is great for investors, how much they care about investors and how much they care about Bitcoin. But listen, PR tools like this
Unchained
Ending Months of Uncertainty, DCG and Genesis Reach Agreement
"12 p.m. Tuesday, February 7th, 2023. Ending months of uncertainty, DCG and genesis reach agreement. Digital currency group DCG and its subsidiary genesis, a leading crypto lending platform that filed for chapter 11 bankruptcy protection have reached a preliminary agreement with the firm's main creditors. The post ending months of uncertainty, DCG and genesis reach agreement appeared first on unchained podcast.
The Breakdown
White House Publishes 'Roadmap' to Mitigate Cryptocurrency Risks
"All right guys, so like I said today is a fallout day. This year was always going to be a tough one following up the institutional failures and frauds of last year and we are definitely seeing that across a number of different stories. And where we'll start is with The White House. Last week, The White House published a note entitled road map to mitigate cryptocurrencies, risks. It was co signed by the national economic council director, The White House office of science and technology policy director, the council of economics advisers chair, and the national security adviser. The note walked through the tumultuous events of last year and reflected on what has been done since the Biden administration's landmark crypto executive order in March of last year. It also laid out the work that still needs to be done to improve regulatory safeguards for the industry. The note pointed out that agencies ranging from the SEC and the CFTC through the FDIC, have increased enforcement efforts surrounding industry issues. It also noted the recent joint guidance issued by banking regulators that focused on the need to separate crypto assets from the broader banking system. Now regarding things that still need to be done, the administration says that they will be issuing a statement on priorities for digital assets research and development shortly, which will focus on the need to provide consumer protection by default.
CoinDesk Podcast Network
DCG-Owned Luno Cuts Staff by 35%
"We have a very wintry mix of crypto stories out here today, starting with some layoff news from will. What do you got? That's right, global crypto exchange Luna is laying off about 35% of its staff, part of Barry silbert's DCG empire. It has offices in Singapore, London, and elsewhere around the globe. This is pretty bad news. Just adding more to the layoff story that we've been covering for quite a while. There's been about 29,000 layoffs according to coin desks own numbers since the beginning of the crypto bear market earlier last year. So just more numbers in terms of headcount, number seems to be a bit all over the place. Some numbers showing that Luna has about 900 employees and now trim about 300 staff, others showing that there's about 600 employees in trimming down about 200 SaaS. So we don't quite know for sure about 35% is a pretty wide margin. Luno has about 10 million different users around the globe, and they service different crypto assets via its exchange product. Of course, this is just part of DCG empire. They also own coin desk, genesis, foundry, and a few other firms such as grayscale. Zack going through the story over to you more bad news to begin the week. Yeah, for sure, man. This is the story about C 5 despite, you know, some pump and token prices and maybe some excitement, maybe a bit of macro tailwinds, still cfi is trimming headcount quite significantly. So I think there's the secular issue here, right? We saw that graphic with all the exchanges that are laying off significant chunks of their workforce. And then there's the specifics as it relates to DCG, which is in hot water, a relative to genesis, filing for bankruptcy last week, and potentially some of those dominoes falling and spilling over into some of their other assets. So Luna here is got a pinch by both those factors. And as a result, you're seeing significant job cuts announced by this exchange. So that to me is where Luna finds itself. It's pretty bleak and it adds to that really big number 29. Maybe 30,000 crypto jobs cut since April that coin desk is doing a good job keeping a running tally on.
Protos
Genesis files for chapter 11 bankruptcy as Winklevii threaten DCG lawsuit
"11 a.m. Friday, January 20th, 2023 genesis files for chapter 11 bankruptcy as wink alike threatened DCG lawsuit genesis global has voluntarily filed for bankruptcy, along with its crypto lending arm, as parent firm DCG faces rising financial distress. The post genesis files for chapter 11 bankruptcy as wink alike threatened DCG lawsuit appeared first on protos.
CryptoCompare
Market Analysis Report 18 Jan 2023
"12 p.m. Wednesday January 18th, 2023. Market analysis report January 18th, 2023. Bitcoin miners power up after market rebound FTX reports four 15 million was hacked DCG halts dividends to preserve liquidity.
The Breakdown
Would a Genesis Bankruptcy Actually Be Good for Crypto?
"All right, Friends, we are back with another discussion of 2022 cleanup, although today's news I would argue could be a heck of a lot more bullish than it might seem at first. So of course, one of the biggest outstanding questions after the fall of FTX has been how far the fallout and contagion might go. And fallout there has been. For example, there has been a significant chilling of the relationship between the crypto industry and the Washington D.C. establishment. However, frankly, the main short term thing that people have been worried about is whether the collapse of FTX would cause other crypto institutional failures. In that context, the biggest spotlight has been on genesis and its parent company digital currency group or DCG. I say this every time, but DCG is also the parent group of coin desk. Now, genesis was hit hard in the three arrows capital collapse. They lost about 2.4 billion in loans out to the hedge fund, and ultimately ended up their biggest creditor with a $1.2 billion claim after liquidating collateral. That claim was eventually moved over to the books of DCG, a move which would later complicate DCG other liquidity issues. When FTX went under, genesis announced that they had something like 175 million trapped there, but it seemed there were bigger issues than that. That same week, genesis lending halted withdrawals, which was problematic both for their main customer base, as well as for the users of Gemini urn, which was crypto exchange Gemini's yield feature. Gemini users have about $900 million or so stuck on genesis as we record. And since then, the tension around the situation has done nothing but grow. Over the past few weeks, there has been an ever escalating war of words. Cameron winklevoss the co CEO of Gemini has published two separate open letters around the case. The first being directed to DCG CEO Barry silbert, accusing him of bad faith stall tactics, and asking him to meet with them to find a resolution, and the second being to the DCG board. Basically demanding that silbert be removed from the CEO role.
The Daily Hodl
Tron Founder Justin Sun Looking To Spend 1,000,000,000 on Digital Currency Groups Assets Report
"11 p.m. Sunday, January 15th, 2023 Tron founder Justin sun looking to spend 1 billion on digital currency groups assets report. Justin's son is reportedly eyeing the assets of digital currency group DCG. The parent company of embattled crypto broker genesis, and many other firms in the industry. According to Reuters, the founder of blockchain network Tron TRX and adviser to crypto exchange hubby is willing to allocate as much as 1 billion of his personal. The post Tron founder Justin sun looking to spend 1 billion on digital currency group's assets report appeared first on the daily HODL
Unchained
The Chopping Block Why Gemini Users Are Mad at Genesis and DCG Ep. 443
"8 a.m. Saturday January 14th, 2023. The chopping block wide Gemini users are mad at genesis and DCG EP four 43. Welcome to the chopping block where crypto insiders has received Qureshi, Robert lechner, Tom Schmidt, and tarun Chitra chop it up about the latest news. Show topics hosts links the post the chopping block wide Gemini users are mad at genesis and DCG EP four 43 appeared first on unchained podcast.
Unchained
Crypto Lender Genesis Owes Over 3B Report
"12 p.m. Friday January 13th, 2023. Crypto lender genesis owes over three B report. Digital currency group DCG is considering selling some of its assets in light of the billions of dollars at subsidiary genesis owes creditors. A Thursday report from the Financial Times. The post crypto lender genesis owes over three B report appeared first on unchained podcast.
Crypto Briefing
Geminis Cameron Winklevoss Calls for Barry Silberts Ousting as DCG CEO
"2 p.m. Tuesday, January 10th, 2023. Gemini's Cameron winklevoss calls for Barry silbert's ousting as DCG CEO Jim and I made a new move against digital currency group today when cofounder Cameron winklevoss called on the company's board to fire Barry silbert. A campaign of lies the tension between
Unchained
Why Gemini Users Are Mad at Genesis and DCG
"We are back. It's the new year. Things are still happening. A lot of the real big dramas of the last December November period are in the process of unwinding. The biggest among them is the situation going on with our friends at DCG. So for those of you who've been following along, there's a big spat between DCG, Gemini and genesis. So genesis, if you recall, giant lender, they're going under, or at least are very close to going under if they don't manage to renegotiate things with some of their some of their creditors. So now one of their biggest creditors or I think actually the biggest creditor is a product called Gemini urn. Gemini earned is basically like a coinbase earn or Celsius type product where you retail users deposit capital. And that capital was being lent through genesis to generate yield. So the Gemini Ernst was frozen. Because of the fact that genesis was frozen, genesis is no longer processing withdrawals. And Gemini understandably is very upset about this as our there are hundreds of thousands of customers. So we've seen this big, very public back and forth now between the Gemini leadership and DCG, their leadership is namely Barry silbert. And so we saw this sort of dueling public statements going back and forth. Genesis and DCG basically claiming that, hey, we've been responsive. We're trying to negotiate the best solution for all the creditors. We're trying our best here. A few days ago, we saw the Gemini CEO Cameron come out and say, hey, we don't think that DCG, we don't think they're acting faithfully in good faith. We think that they are screwing with us. They're kind of dodging our calls. They're not willing to actually negotiate. And most notably, in the most recent letters, there was, I think, three rounds of back and forth. In the most recent letter, Cameron comes out and accuses DCG of fraud.
The Decrypt Daily: Bitcoin & Cryptocurrency News Podcast
"dcg" Discussed on The Decrypt Daily: Bitcoin & Cryptocurrency News Podcast
"Might make it necessary for them to sell that golden goose, but I don't know. So that goes to the question of what are the things that are happening with DCG that might make themselves as you put it the golden goose and I'm thinking go to goose means Bitcoin. It means that trust means the trust itself. So remember, they are the manager, DCG owns grayscale. Grayscale is the manager of the trust. I'm not who she is the named portfolio managers, but grayscale, which is owned by DCG. Is the manager. And at the end of the day, DCG very successful company early adopter in our space did lots of great investments, but because of the FTX debacle. And to start with three arrows, you're right. It's really start with three arrows. One of their units. So they've made 200 investments ish. One of their investments was this company called genesis trading was probably the preeminent prime broker in the digital space. Lent to everybody. They had a large loan to three arrows capital, three hours capital defaulted. There's the $1 billion $1.1 billion liability. Genesis couldn't claim. So the parent DCG said, we'll assume that liability and all future recoveries. And therefore, genesis, you can keep going. So genesis keeps going. Well, then FTX turns out, Alameda lied, even worse than three arrows, and didn't have the assets. So now genesis has an even bigger hole in the balance sheet. And they have a liability due from Alameda. And May a long, long story short, there is an issue with genesis being owed roughly $1.6 billion from the parent. Now the parent doesn't have to pay until May on the $500 million of Angus are closer to 600 million. There's about $600 million of note that's due in May, and then there's this 1.1 billion of liability that isn't callable. So they don't have to redeem it, but it gets complicated in the event that genesis were to file bankruptcy and so there's a very complicated web of, as you say, fallout that could still occur because look, at the end of the day, all these companies are victims. Well, not all of them. BlockFi is a victim, you know, genesis is a victim. FTX is the perpetrator. What they did total fraud, theft, all kinds of bad stuff. You know, what were their risk management errors at genesis? Yeah, I mean, you could say that, right? You could say they were overly concentrated to Alameda. Where the risk management errors at BlockFi and others, you could say that. Although at the time, when both of those firms made the loans to Alameda, their total assets were so large that the percentage loan to Alameda wasn't that big a deal. So it's not like it is today where it's a material part of the assets they have left. Right. But ultimately, genesis has a hole in their balance sheet, which means the parent DCG as a whole in their balance sheet. When words like bankruptcy get thrown around and restructuring, restructuring is not the end of the world, right? Banks restructure all the time, brokerage firms restructure all the time. Companies restructure United Airlines is restructured, I think, twice in my lifetime. Still, people fly on their planes. So it's not the end of the world. Jet holders lose. Equity holders lose a lot. Sometimes there can be structures where the equity holders get a little bit, but the nice thing about a trust, the trust holders can't lose. The worst case is the trust is forced to liquidate and you get your Bitcoin. And actually the discount closes. So that's a good that's a good outcome. The worst case scenario is the trust keeps going. Still trades at a discount. But you still own the underlying asset at the end of the day and eventually someone will come along and close that discount. You set a couple of things. It has holding or has outstanding payments to genesis. Gemini is saying genesis owes them 950 million bit valvo saying that genesis owes them 290 plus $1 million. And there's a lot of other people in that, I guess, domino chain that is going to be affected by this. Two questions that come out of this. Number one, what are the odds that any of that is going to be get paid back to from genesis or get paid from Alabama to genesis and then to the people so we can stop this contagion as Alameda is going through bankruptcy and lawsuits and sandpaper. We know all of that. You said, may it's owed. It doesn't look like that. It's very complicated. There are reports and again, I don't know if they're true or not. But there are reports that Alameda paid back genesis 2.6 billion in advance of filing bankruptcy. If that's true, it probably happened within the 90 day window that would be subject to potential clawback in the bankruptcy. So the bankruptcy trustee could claw back from genesis or DCG whoever ended up with the capitol. That capital. Pardon? That would be devastating. That would be devastating because my guess is, you know, that dog don't hunt and there's not enough money in the pickle jar. But I think the real issue is, for genesis, there's credits committee, winklevoss, twins have been prominent lately with letters to the board about that. But the creditors committee, I think, is made up of creditors that are owed $3.6 billion. There's reportedly $2.6 billion in assets at genesis. I think that was the reported number. It's within spitting distance. And so I left that $1 billion hole that was essentially the 600 million due from DCG and I think the amount that they owe to Eldridge, which is called their loan for 350 million. And so, and that was a secured loan. So as I understand it, the creditors committee has offered a package, which means usually a package means, okay, we'll take X dollars in cash, and then we'll take some future payouts and then maybe we'll take some equity, I mean we make some money over the long term. Because the golden goose is pretty good. And if Bitcoin prices were to rally here, then the cash flow from GBTC would rise and DCG would be able to make the payment sooner to genesis and things would be good. We're in a funny place where there's still some contagion, but here's the thing. We're talking about numbers that are big, right? Billions of dollars. But we're talking single digit billions in an ecosystem that's still just under a $1 trillion. And I don't mean to diminish what's going on. But it's just not that big a deal. Like I keep saying, you know, when mount gox went down, way
Unchained
"dcg" Discussed on Unchained
"The loan has no late payments and the borrowers currently not in default, for example. Right, right. But you also agreed about Cameron's definition of current asset. So that then supports Ryan's theory. Ryan selek is his theory that they're using this in two different ways. Okay. So at this point, what questions do you have for DCG or very silver genesis? What do you think people don't yet know that would help determine either where to lay the blame or how this situation could potentially be resolved or how it might eventually be responsive. I'd like to see to ask DCG for some sort of plan between the two entities, D.C. gene and genesis as to how they look to fill these liquidity gaps because the reality is is that we have an idea of what the assets are. We know what the liabilities are. We also know that there's liabilities are going out the door. So the question is that your asset base. How do you monetize it? How do you monetize it so that you can pay back your creditors or at least come to the agreement with your creditors? And I think that's something that's really important. And it's important to bear in mind that these are intercompany loans. So the reality is that when we're talking about genesis, we kind of end up talking about DCG because this promissory note, I think while it does, it serves a purpose, the reality is that in a situation, what's materialized over the last few months, right? It was meant to kind of cover a whole. And over the long run be repaid, but in under circumstance in which you have liabilities going out the door, you have to be in a situation where you can monetize your assets so that you can cover those liabilities. All right. Well, who knows how all of that will play a but another wild colored here is that Bloomberg reported that federal prosecutors in the eastern district of New York, as well as the Securities and Exchange Commission are investigating the transfers between DCG and a subsidiary that people are positing is probably genesis. And also looking into what it is that investors were told about those transactions. DCG says they don't know anything about this, but I was wondering what you think investigators would be looking for if that is the case. I think it's the goal here would probably be to understand to what degree the arms length arms length I say is that the nature of the promissory note was really conducted in. To one extent was Barry, for example, directly involved in constructing that loan, I promise a note to genesis because I think ultimately that becomes potential issue. It's also important to kind of note that when you kind of zoom out a little bit, this starts to look pretty ugly, right? We're talking grayscale and not our subsidiary of DCG, who obviously has GBTC, which is kind of their big product and one of the most important revenue lines for DCG and its subsidiaries. One is guarded tons of attention, three AC was involved ultimately got liquidated DCG has now a relatively large stake or 11% stake in GBTC and just kind of worth noting that this is their most valuable asset as an empire if you want to call it that. So I think the reality is that you're in a position where the intercompany kind of relationships start to look fairly shady and I think it's pretty standard for regulators to look into this stuff. It's worth noting that when you look at traditional finance, there is there needs to be kind of an arms length nature and the way that companies deal with themselves even between subsidiaries and that's going to be that's going to be sticking point here. And I think that's actually lesson that we're probably we can take away from in 2022. And what kinds of terms on that promissory note would kind of meet the standard of arm's length and what kind of terms and conditions would not. Sure. I mean, the one that really sticks out to me is the interest rate on the loan. Interest rate was deemed 1%. Now, if I were to just look at DCG is a venture capital firm that has kind of exposure everywhere quite a bit of concentration in terms of where it's exposures, especially into crypto. And then look at, for example, all our crypto firms that do have bonds outstanding. One thing is clear is that 1% is not really the appropriate rate to quantify the credit risk behind DCG, especially ten years out. So that's something that I would look into to kind of question because I have a hard time believing that 1% was really the right place to price this. But then again, from legal perspective, I'm not sure exactly what those rules would be in terms of what defines arms length or not. So as you alluded earlier, genesis owes creditors more than $3 billion in DCG is exploring selling some assets from its venture portfolio to raise money. Do you think that strategy could be successful and get them out of this pickle in time? Yes, I do think that that is it is a potential solution. What I want to caveat that, right? I think it's worth noting that a lot of their assets are venture capital investments, which at some point are marked at a certain valuation, but it's very possible and in fact probably likely that those valuations are not marked to market currently and it's also worth noting that typically a market when they know about participants in trouble and has to sell the market is not going to be very kind in terms of giving you the valuations. You're looking for. So I think the fear and this is something you might have brought up at the very beginning of this conversation is that liquidity issue, but could very well end up being a bigger issue, solvency issue at that. But do you also think that they could sell the venture investments in time to raise the amount of money they would need? It's definitely possible. I mean, I think it's important to note that obviously we have the main majority coming so that's only a few months away. So I would imagine that if they're going to get it done, it needs to be sooner than later. And to be Frank with you, I would have liked to have seen this in December. I have an idea in my head as to how this gets resolved for DCG and genesis. But you know what? I think the truth is, is that that's something that barrier DCG doesn't necessarily want to go on with or doesn't necessarily want to admit the situation they're currently in, which I think ultimately only risks harming them over the next few months. And when you say that you have an idea of how this works out, is that selling the venture investments or what is it? Yes, partially selling the venture investments. I mean, it's worth noting that obviously they own 11% of GBTC, GBTC trades at a 40% discount. In my mind, this whole thing has amounted to one very big GBTC discount trade, which ultimately has ended up back in the hands of the parent of the issuer of GBTC. Which I think, you know, if I were to kind of interpret it in my own way,
The Breakdown
"dcg" Discussed on The Breakdown
"Separately, three arrows capital was an investor in various grayscale products. But then the bigger one, question 14. Why did DCG take over the bankruptcy claim against three AC and what did DCG get in return from genesis capital for the $1.1 billion promising note? Quote, until the summer of 22, genesis capital was the premier crypto lending firm in the world. When three AC defaulted on its loans from genesis and numerous other lenders in June 22, there was palpable fear in the market of contagion spreading through and devastating the entire industry. That was one consideration in DCG moving to assist genesis capital. In addition, DCG firmly believed that substantial demand for institutionalized prime brokerage services would continue once the crypto market stabilized. Genesis had unrivaled expertise and the best institutional client base in the world, having built the first institutional crypto trading desk in 2013 before eventually launching genesis capital in 2018, thus DCG believed that genesis both the trading division and the lending desk were worth protecting. DCG and its board determined that it was in the best interest of genesis, its lenders and DCG to try and help support genesis. The mechanism that was recommended by our financial and legal advisers with input from our accountants was for DCG to assume the three AC claim and replace it with the promissory note due to genesis. The $1.1 billion promissory note which matures in 2032 represents DCG assumption of liabilities owing to genesis from three AC in connection with their default in June 22. DCG agreed to assign an exchange genesis $1.1 billion unsecured loan receivable from three AC, the recovery of which was highly uncertain, with the promissory note from DCG. DCG did not receive any cash. Cryptocurrency or other form of payment for the promissory note. DCG effectively assumed genesis risk of loss on three AC loan with no obligation to do so. Importantly, the $1.1 billion promissory note is not callable and does not contain any other similar features of a callable Bond. Additionally, genesis assigned to DCG its claims against three AC and as part of the transaction agreed that any recovery received by DCG and respect to the three AC liquidation will go directly to paying down the $1.1 billion promissory note. Now the rest of the Q&A are largely used to disavow other bad actors in the ecosystem. Yes, DCG invested $250,000 in FTX series B and had a small trading account with them, representing less than 1% of their transactions, but Barry had no relationship with Sam, other than an email conversation in the middle of 22. And of course, Sam was never on the DCG board. What's more no DCG didn't have any relationship with Celsius and no DCG wasn't involved with Tara Luna, aside from purchasing 60,000 Luna tokens in late 21 and early 22 to help foundry set up a staking node. And finally, no, of course, DCG doesn't have any knowledge or reason to believe there is an eastern district of New York investigation regarding intercompany loans. So that's what DCG had to say about itself. Join coin desks consensus 2023. The most important conversation in crypto
The Breakdown
"dcg" Discussed on The Breakdown
"Genesis so much as a penny of actual funding. To make up for the three AC losses. Instead, DCG entered into a ten year promissory note with genesis at an interest rate of 1% due in 2032. This note was a complete gimmick that did nothing to improve genesis immediate liquidity position or make its balance sheet solvent. And even though DCG was tagged in morrow's tweet, no one from DCG, including Barry, bothered to correct his misstatement. Now holding aside the PR Ness of this whole fight here. This question of the ten year promissory node in terms of how legitimate it is and whether it represents genesis and DCG businesses operating at arm's length is one of the key questions in this whole affair. Now winklevoss letter goes on to argue that there were more lies in private communications, and that DCG had not in fact absorbed the three AC losses claimed. Instead, the letter argues DCG and genesis were engaging in to use winklevoss words accounting fraud. There was a document shared at that time Gemini says called Gemini risk metric request. Winklevoss writes quote, the financial position per asset section of this document contained what we have since discovered to be at least two critical misrepresentations. One it characterized the DCG promissory note as a current asset within a subcategory labeled other assets and two it valued it at $1.1 billion. First, as a matter of generally accepted accounting principles and common understanding, a quote current asset refers to cash, cash equivalents, and other assets that can be exchanged into cash within one year. A promissory note with a principal repayment due in ten years falls outside of the definition of a current asset by a country mile. Second, there is no market on earth that would value an unsecured long dated promissory note at face value. The net present value of this note would be heavily discounted, approximately 70% to reflect its value as of today, perhaps 300 million. So as you can see here, it is this promissory note, this ten year promissory note that is really at the guts of this thing. Now the last section of winklevoss
The Breakdown
DCG Responds As Gemini Accuses Company of Fraud
"Let's get into the meat of today. And that is, of course, the DCG drama continuing. I mentioned on yesterday's show as I was finishing up recording that Cameron winklevoss had just dropped another open letter. His second in two weeks. That letter ended up eliciting the longest response we've seen for months from DCG and its CEO Barry silbert. At this point, I don't think many of you need too much background, but the ultra TLDR of the situation is that genesis is a subsidiary of the digital currency group DCG, who also own coin desk, by the way. And genesis has both a lending business and a trading business. The lending business in particular had a rough 2022. They were the biggest creditor of three arrows capital after it collapsed, which led to DCG taking over that claim and the genesis CEO resigning. Genesis also had a $175 million or so stuck on FTX, and in the wake of the FTX collapse, genesis lending halted withdrawals. Among other things, that has trapped around $900 million that was part of Gemini's earn program, which is their consumer yield program. As time has gone on, Gemini's customers have been getting angrier and angrier and so too the public pressure from Gemini on genesis and DCG is also ratcheted up. Last week, that took the form of an open letter asking for Barry silbert and DCG to come to the table by January 8th, which was Sunday. That's the letter in which Cameron winklevoss accused silbert of bad faith stall tactics his words. In the wake of that, there was a bit of back and forth on Twitter, but nothing really more than that. Then of course, on Friday, Bloomberg reported that DCG and genesis were being investigated by the Department of Justice, which took the situation up a couple more notches. Well, yesterday on Tuesday, Cameron winklevoss dropped a second open letter and this one was even more accusatory than the first. This one was directed not to bury silbert, but to the entire digital currency group board. The big theme of that letter was that this was no longer just a public disagreement between business partners, but an accusation of fraud. The letter kicks off, I am writing to let you know that Gemini and more than 340,000 earn users have been defrauded by genesis global capital. Together with its parent company digital currency group, its founder and CEO Barry silbert, and other key personnel.
CoinDesk Podcast Network
"dcg" Discussed on CoinDesk Podcast Network
"There is no deadline we tipped our hand and don't have one. We will literally do nothing. Lee drogon from starkiller capital says JFC just sue him into bankruptcy already. That's where this is going enough with trying to get him to play ball. Who has been following the situation closely writes, Cameron's letter does read like a formal complaint. It also opens the door for Gemini earned clients to sue now, and these loan terms will be aired and discovery. DCG now has another off balance sheet liability in the form of lawsuits. Coin bureau writes one can imagine how bad it has to have become for camera to publicly accuse barrier fraud on Twitter. He wouldn't have done so if his lawyers didn't think they were substantial evidence of it. And it's only Tuesday. Still Scott Johnson, the general partner at GB capital and finance lawyer says if you actually have a claim that makes sense to pursue, you don't need to issue public nasty grams. Seen so many out of court restructurings and it's painfully obvious by actions who has leverage. And here it's not Gemini. Just a flyer to hopefully build public pressure. But then again, the flip side from some folks like Bitcoin Jack is don't forget winkle by higher Kirkland and Ellis. Anything they publicly say is carefully crafted reviewed research vetted, et cetera by creme de la creme of lawyers, so I assume that means they think slash know they have a strong case, otherwise this opens them up for serious countersuit. So anyway, all of this would obviously be some serious developments if nothing else had happened, but after months of near public silence, Barry silbert and DCG decided to comment on this one. The response took the form of a DCG shareholder letter. The first part of the letter was excerpted in a thread from silbert himself. It was frankly a lot of background in context setting with the first paragraph being a rehash of what DCG has done, the second paragraph being about the early days of the industry, the third paragraph being about how hard the last year has been, and then it just sort of ends. However, there is a whole separate section. And that's really where the meat of this was. The second section was organized as a Q&A. And the thrust of it was pretty clearly and transparently to reinforce the argument of distance between DCG as a holding company and its subsidiaries as independent concerns. Question two, how does DCG interact with its wholly owned subsidiaries? Quote, since DCG was founded or subsidiaries have launched and operated as independent companies with their own management teams, financial and risk management protocols and legal and compliance oversight. Each subsidiary has its own culture, operational structure, and incentive mechanisms. Every aspect of each subsidiaries day to day businesses directed by the respective subsidiaries leadership team. DCG has a team of approximately 50 individuals that makes investments. Supports our portfolio companies and provides strategic guidance in general oversight to our subsidiaries. To be abundantly clear, DCG does not direct any trades, loans, or borrows from genesis business. Question three do DCG and any of its wholly owned subsidiaries, commingle cash. No, each of DCG is wholly owned subsidiaries has its own bank accounts, securities accounts and crypto accounts and maintains separate books and records. Now we get to the meaty bits a few questions later. Question 7, how much does DCG O genesis capital? DCG writes like hundreds of other institutional investors, DCG borrowed capital from genesis capital, the lending arm of genesis. These loans were always structured on an arm's length basis and were priced at prevailing market interest rates. This answer then goes on to discuss the loan that matures in May of this year, plus some other smaller investments. Of course, that doesn't get to the thorny question of the three arrows capital promissory note which comes later. Question 13, what was DCG relationship with three arrows capital? DCG has never had a relationship with three arrows capital. Barry does not recall ever meeting, speaking with or otherwise privately communicating with the three arrows
CoinDesk Podcast Network
"dcg" Discussed on CoinDesk Podcast Network
"In June 22, the music stopped three AC collapsed laying bare the poisonous fruits of this radioactive trade. Instead of stepping up to solve the self created problem and despite having earned more than a $1 billion in fees, all of the expense of genesis lenders, barrier refused to take responsibility. Instead, he resorted to committing fraud to protect his ill gotten gains. At the end of the letter, winklevoss demands that Barry be replaced as CEO of DCG. Now, we'll get into the longer Barry and DCG response in just a moment, but quite soon after winklevoss tweeted this letter, the DCG account responded. At DCG co says, this is another desperate and unconstructive publicity stunt from Cameron to deflect blame from himself in Gemini, who are solely responsible for operating Gemini earn and marketing the program to its customers. We are preserving all legal remedies in response to these malicious fake and defamatory attacks. DCG will continue to engage in productive dialog with genesis and its creditors with the goal of arriving at a solution that works for all parties. Now whoever you think has the right or wrong of it in this situation, it is certainly the case that one of the attempts of winklevoss letters is to make this seem entirely like a genesis problem and not at all like a Gemini problem. In fact, based on the way this letter was written versus the first letter was written, it seems likely to me that they took to heart that they might have overplayed that hand when it came to the first letter. After all, the program was named Gemini earned not genesis earn. Still, when it came to the DCG response, the community wasn't so sure about what they had to say. D.C. investor writes, I don't know, reading the letter is someone who has no dog in this fight, I suspect her soon going to have SDNY resolve this for you. Collins belt and writes ah, so your defense is that they were stupid enough to trust you
CoinDesk Podcast Network
"dcg" Discussed on CoinDesk Podcast Network
"These parties conspired to make false statements and misrepresentations to Gemini earn users, other lenders, and the public at large about the solvency and financial health of genesis. They did so in an effort to mislead lenders into believing that DCG had absorbed massive losses that genesis occurred from the three arrows capital collapse and induce lenders to continue making loans to genesis. By lying, they hoped to buy time to dig themselves out of the hole they created. Hell of a start. So fraud by way of lying about the financial health of genesis. That's the key idea here. So what then are Cameron's arguments? First, he said genesis landed about 2.36 billion to three hours capital. Second, after the collateral was liquidated that led to a loss of about 1.2 billion. Third winklevoss claims that at that point DCG could have restructured the genesis loan book or patch the hole, but that it didn't do either. Quote, beginning in early July 2022, Barry DCG and genesis embarked on a carefully crafted campaign of lies to make Gemini earn users and other lenders believe that DCG had injected. $1.2 billion of actual support into genesis. Now, this campaign of lies is what the accusation of fraud rests upon, so what are their arguments here? When kloss writes on July 6th, Michael morrow then CEO of genesis tweeted, DCG has assumed certain liabilities of genesis related to three AC to ensure that we have the capital to operate and scale our business for the long term. The statement was false and misleading. In reality, DCG had not ensured that genesis had capital to operate. In fact, DCG hadn't given genesis so much as a penny of actual funding to make up for the three AC losses. Instead, DCG entered into a ten year promissory note with genesis at an interest rate of 1% due in 2032. This note was a complete gimmick that did nothing to improve genesis immediate liquidity position or make its balance sheet solvent. And even though DCG was tagged in morrow's tweet, no one from DCG, including Barry, bothered to correct his misstatement. Now holding aside the PR Ness of this whole fight here. This question of the ten year promissory node in terms of how legitimate it is and whether it represents genesis and DCG businesses operating at arm's length is one of the key questions in this whole affair. Now winklevoss letter goes on to argue that there were more lies in private communications, and that DCG had not in fact absorbed the three AC losses claimed. Instead the letter argues DCG and genesis were engaging in to use winklevoss words accounting fraud. There was a document shared at that time Gemini says called Gemini risk metric request. Wingle Voss writes quote, the financial position per asset section of this document contained what we have since discovered to be at least two critical misrepresentations. One it characterized the DCG promissory note as a current asset within a subcategory labeled other assets, and two it valued it at $1.1 billion. First, as a matter of generally accepted accounting principles and common understanding, a quote current asset refers to cash, cash equivalents, and other assets that can be exchanged into cash within one year. A promissory note with a principal repayment due in ten years falls outside of the definition of a current asset by a country mile. Second, there is no market on earth that would value an unsecured long dated promissory note at face value. The net present value of this note would be heavily discounted, approximately 70% to reflect its value as of today, perhaps 300 million. So as you can see here, it is this promissory note, this ten year promissory note that is really at the guts of this thing. Now the last section of winklevoss letter, which accounts for almost two pages, effectively amounts to an accusation that the only way in which Gemini would have gotten itself into this situation was if it wasn't serving its own interests as an independent company, but instead serving larger DCG goals. This is an argument which if accepted to be true, would obviously undermine the narrative of independence between DCG and its subsidiary. This undermining of the distance between DCG and genesis is clearly Gemini's goal with this letter. Now to get specific, the letter argues that genesis goal was never to make as much money and manage risk as it might have been if it was independent. Instead, they argue it was to prop up the grayscale Bitcoin trust nav trade. Remember for much of the run up in 2020 and 2021, GBTC traded at a premium to the underlying Bitcoin it represented. In 21, however, that switched. Here's the way winklevoss characterizes what happened then. Disturbingly, not only did genesis not close out three AC's position when the nav trade inverted, something any rational independently operated business would have done, it continued to lend a three AC on attractive terms and accept GBTC as collateral. For grayscale this had the desired effect of keeping GBTC shares from being sold into the market, which would have depressed the share price and further wind the discount to net asset value. But for genesis this had the undesired effect of keeping its risk position open and allowing it to grow. Why would genesis enter into a toxic risk position where the best it could do was not lose money? Things only begin to make sense when you realize that the Bitcoin this swap was stuffing into the grayscale trust like a Thanksgiving turkey is stuck there forever. It can never be redeemed, or at least until grayscale and its sole discretion decides to implement a redemption program allowing GBTC shares to be converted back into Bitcoin. As a result, Barry was comfortable with genesis loading up more and more on this toxic trade because it was a gambit to feed the grayscale trust. Barry's financial hotel California that would print money for the DCG universe in perpetuity. The end would justify the means. So here's the money shot of this winklevoss open letter. Quote, instead of booking these swaps as the risky derivatives that they were, genesis hid them by mischaracterizing the first and last legs of these swap transactions as collateralized loans on its balance sheet. This made the genesis balance sheet appear healthier than it originally was. Fraudulently inducing lenders to continue making loans.
CoinDesk Podcast Network
"dcg" Discussed on CoinDesk Podcast Network
"It's the hash coming to you live on coin desk T, V, I'm Zach seward, my head is moving. And everyone else's head is moving too. That's will foxley. You guys are the best. All right, let's get up to speed on what's going on in the world of crypto news. We've got some fresh drama in the spat between DCG and Gemini. We'll take it away. Our heads are moving, but the wingle vibe wants some heads to roll. See what it did there? Pretty nice, right? The winklevoss came out this morning with a really nice letter at Barry silbert. The CEO of DCG, which also owns coin desk as disclosure, saying, we need this guy out. We need him out. So they wrote this very long letters about four pages long. They posted it to Twitter, just like they did a few days ago. A few weeks ago at this point, a prior letter saying, hey, we need to engage with conversations with DCG in order to rectify the situation for Gemini, earn customers. This morning, the escalated a little bit, saying that the board needs removed. DCG CEO Barry silbert immediately in order to rectify the situation for customers just as a recap back in November, we saw that genesis trading and lending halted withdrawals on its platform due to a hole in balance sheet and liquidity issues. Gemini urn, which has about $900 million under management, had to also withdraw or halt withdraws to its customers because they were using genesis to power their application. So now we're seeing a little more fighting on Twitter, Wendy, I know you love this stuff. You love seeing the Titans of the crypto industry buttheads, what's your take on the story? So, okay, they need to figure things out. I do appreciate the fact that they do want to kind of do this publicly, but again, you guys, at the same time, this is literally like Chase Bank and Wells Fargo, CEOs like going head to head in real life on Twitter. You never see that happen in a million years. So it does make our industry look a little bit crashed. However, I'm here for the drama. I'm a 100% for it. But at the same time, there's people's livelihoods that are going to be impacted by this. I don't understand why Cameron from Gemini is calling for berry to step down from DCG board. It doesn't really make sense to me. I feel like that's kind of like a spectacle esque part of it. I don't think that's necessary. And I don't think that's going to solve the problem. The way to solve the problem is to actually address the problem instead of arguing and whatnot. I would love to give this over to Zach for his take. Yeah, it's a pretty spicy letter. The word fraud is thrown around quite a bit. And I think what's alleged here is just an inter tangling of business interests that led to some bad stuff in the market. And I think Gemini is feeling the pain as it relates to its own program. It should be said, DCG is out here on Twitter saying that this is a publicity stunt. This is some garbage, so they definitely are putting some words back toward Cameron here. But yeah, the allegations of fraud and the allegations of if genesis were an independent business from the DCG empire, it wouldn't be doing this stuff. And it all comes down to the grayscale trade that really bit three arrows in the behind and has since many more in the behind as well. So the fact that this was entangled with some of DCG other business interests is to me what is the foundational allegation in this, again, pretty provocative letter sort of laying out what Gemini claims to be the facts of the case at this point in time. So that to me, I think, is potentially why the call is so strong to remove Barry silbert from the head of DCG, right? They say, hey, board, take some action and take some action now. It does escalate the finger pointing here in this instance. The feuding is definitely ramping up, going up a notch. I don't know if the DCG board is going to take action on this, but it's going to be really fascinating to see how this unfolds beyond just sort of the retort tweet that we've seen from the DCG handle. Wendy, it's awesome to you though. I just don't understand. I get it, but at the same time, it's like, you can't tell other people what to do and you can't tell other people how to run their business. They can't just remove him from the board just because Gemini says you need to do that. I know that they've partnered. They've done business before, but that just kind of seems really ridiculous. And again, they need to address the actual problem. Yes, everybody kind of knew the risks about the features and different stuff like that. But at the same time, I will say that Jim and I did a really, really good job leading customers know exactly what that was. I did use that product and it literally told you, like you're moving your crypto over here, this is not geminis company. It's like somebody where partnered with. So I understood that it was going to a separate entity and it wasn't part of Gemini, even though it was marketed as Gemini Ernst because I read the actual disclosures that popped up. So billionaires, gazillionaire is going to be for Jen. Give us your take though, please. So Cameron is accusing DCG of some accounting malpractice here. I think that's why he's asking for Barry silbert to step down. I think when we see these conversations play out in the public, it tells me two things. One, that there's maybe some frustration behind closed doors. They're not getting the answers that they hope to get from all of the parties involved.
CoinDesk Podcast Network
Gemini's Winklevoss Calls for Barry Silbert's Removal From DCG
"We've got some fresh drama in the spat between DCG and Gemini. We'll take it away. Our heads are moving, but the wingle vibe wants some heads to roll. See what it did there? Pretty nice, right? The winklevoss came out this morning with a really nice letter at Barry silbert. The CEO of DCG, which also owns coin desk as disclosure, saying, we need this guy out. We need him out. So they wrote this very long letters about four pages long. They posted it to Twitter, just like they did a few days ago. A few weeks ago at this point, a prior letter saying, hey, we need to engage with conversations with DCG in order to rectify the situation for Gemini, earn customers. This morning, the escalated a little bit, saying that the board needs removed. DCG CEO Barry silbert immediately in order to rectify the situation for customers just as a recap back in November, we saw that genesis trading and lending halted withdrawals on its platform due to a hole in balance sheet and liquidity issues. Gemini urn, which has about $900 million under management, had to also withdraw or halt withdraws to its customers because they were using genesis to power their application. So now we're seeing a little more fighting on Twitter, Wendy, I know you love this stuff. You love seeing the Titans of the crypto industry buttheads, what's your take on the story? So, okay, they need to figure things out. I do appreciate the fact that they do want to kind of do this publicly, but again, you guys, at the same time, this is literally like Chase Bank and Wells Fargo, CEOs like going head to head in real life on Twitter. You never see that happen in a million years. So it does make our industry look a little bit crashed. However, I'm here for the drama. I'm a 100% for it. But at the same time, there's people's livelihoods that are going to be impacted by this. I don't understand why Cameron from Gemini is calling for berry to step down from DCG board. It doesn't really make sense to me. I feel like that's kind of like a spectacle esque part of it. I don't think that's necessary. And I don't think that's going to solve the problem. The way to solve the problem is to actually address the problem instead of arguing and whatnot.
The Breakdown
"dcg" Discussed on The Breakdown
"Status of internal dealings between the firms has been one of the key points of contention between genesis and its creditors. In that same letter I was mentioning last week, a key criticism was the failure at DCG to properly recognize debt between companies, with winklevoss saying that the company's finances were quote beyond commingled. Last summer, genesis was hit hard by three hours capital defaulting on loans. To firm up their balance sheet, DCG assumed the bad debt on its own balance sheet by issuing a promissory note for 1.1 billion to genesis. This loan is not due to mature until 2032. Later during last year, an additional promissory note for 575 million was issued by DCG to genesis, which is due to be paid back this may. In November shortly after genesis halted redemptions and loan origination from its lending platform, silver asserted in a letter to DCG shareholders that the intercompany loans were made in the ordinary course of business and quote always structured on an arm's length basis and price to prevailing market interest rates. Bloomberg sources say that the authorities are specifically looking into what investors were told about these transactions. Now, according to sources, these investigations are at an early stage, with regulators and law enforcement requesting interviews and documents. There have been importantly no accusations of wrongdoing at this point, and no investigations have been publicly acknowledged. What's more one of Bloomberg sources say that the investigations had begun prior to the collapse of FTX. A DCG spokesperson said in a statement, DCG has a strong culture of integrity and is always conducted its business lawfully. We have no knowledge of or reason to believe there is any eastern district of New York investigation into DCG. It's hard to get a lot of good information at this point. The community is just one big rumor mill more or less. But speaking of the community, there is also a bit of a community grassroots effort around the grayscale Bitcoin trust. Many have pointed out that most of the problems that DCG and indeed throughout the collapse of crypto markets last year have as an ultimate source, the collapse of the grayscale Bitcoin trust share value. Until March 2021, GBTC traded at a healthy premium, allowing hedge funds and other large market
The Breakdown
Even Tiny Market Movements Feel Miraculous
"All right, friend I was happy Monday and if you've been on Twitter pretty much at all this year, there's an image I'm sure you've seen. It's a line drawing of a guy screaming with excitement with a little Green Arrow saying 1% up. The gag of course is that after all of the crap that we've been waiting through, even tiny positive market movements feel, well, miraculous. I have a feeling this is going to be one of the key memes of 2023, and it's certainly captures a lot of the energy over the last couple days. On Sunday, Bitcoin broke its painful range bound streak below 17 K the price of BTC moved up by 1.3% on the day and finally up through the $17,000 mark where it remains right now. As it did so it dragged the total crypto market cap up by about 3% alongside it and capped off a relatively solid green week. Now, analysts pointed out that the charts still look bearish, but everyone is happy to have something positive to write for once. Coinbase institutional David duang pointed out in a note that the next technical resistance level sits at 17,800, so we could see a little run here. Fun strats Sean Farrell suggested that there were plenty of buyers looking to commit funds below 17,200, but that, quote, this paints an incredible picture of a strong bull wall at current market prices and suggests a strong bottom is forming. So what drove the weekend pump? Although industry news has been dire recently, there doesn't appear to be a fast and dramatic conclusion to anything which would drive further market breakdowns. Global inflation numbers have been coming in cooler than expected recently and with the U.S. CPI data due for release on Thursday, we could see yet another reason for the Federal Reserve to take a break on its aggressive monetary tightening campaign.
The Daily Hodl
Federal Prosecutors and SEC Probing Crypto Titan Digital Currency Group Report
"9 p.m. Sunday, January 8th, 2023. Federal prosecutors and SEC probing crypto Titan digital currency group report. Federal authorities are reportedly investigating the internal finances of crypto giant digital currency group DCG. According to a new report by Bloomberg, anonymous sources familiar with the matter saved that prosecutors from New York are probing the transactions between DCG and genesis a crypto lending subsidiary of the firm, as well as what customers were. The post federal prosecutors and SEC probing crypto Titan digital currency group report appeared first on the daily HODL
The Bitboy Crypto Podcast
"dcg" Discussed on The Bitboy Crypto Podcast
"Can't say the name. Something love says we need to have candles hosts more often just saying, hey, shout out. Shout out. We'll have to send you a hat. Anyway, crypto giant, CG shuts down headquarters subsidiary, amid global economic crisis. Yeah, they shut down their wealth management division. I think this is what this is about. Oh boy. Digital currency group has announced that it is shutting down operations at its wealth management division, headquarters according to a report by the information DCG is taking such a drastic step due to the prevalent economic situation across the world. To that effect, a spokesperson for the firm released a statement saying, due to the state of the broader economic environment and prolonged crypto winter, presenting significant headwinds to the industry. We made the decision to wind down wind down headquarters, effective January 31st, 2023. It's also worth noting that the news of headquarters shutting down comes on the same day that genesis announced a massive layoff itself. Genesis disclosed earlier that it would be, it would be parting ways with 30% of its staff. Read that next one, recall. Wait, read that next paragraph. I wanted to read that record. Back in November, Barry silver. CEO Barry silbert asu gage. I already see investor fears. A Serge investors fears. Assuring them that there was nothing to worry about, that was despite DCG owing about 575 million the genesis. Genesis later halted withdrawals barely a few days later as a result of this and is yet and is yet to resume withdrawals as of this writing. In a bid in a bid to distance itself from the situation, DCG claims that it has no business with the matter as it entirely as an entirely genesis liability. Nonetheless, DCG once appeared to be untouchable, but may fast, but may fast be losing its financial stability. This is, oh God, I'm getting more bearish more bearish as we read these stories. Yeah, there's a lot going on right now, and I think we're right at a tipping point, but when I first read this, I was like, oh, this isn't good, but now the more I'm thinking about it, this could be a positive thing that comes out as a very negative thing, because we know obviously DCG owns a lot of subsidiaries, right? And the DCG is the parent company. We also know, and Barry silbert owns pretty much all of most of these things. Grayscale and a lot of that kind of stuff. We know they did a loan to themselves to fill the whole on genesis right at one point, you know, Barry took a loan from DCG to genesis to fill it and now that liquidity isn't there. I'm wondering if they had this wealth management division, how much of their own other stuff is tied up within this wealth management division, just like it was in DCG earn grayscale and genesis and all their other subsidiaries. So maybe they're folding a subsidiary like Ben kept referencing all these other investments that personal investments that Barry had. And now he needs to liquidate those to activate them to backstop DCG. Maybe there was enough in this wealth management division if they, if they wind this down, return all those funds to the investors, one of them potentially being buried, now they can backstop and fill this hole and continue to operate without having any major issues. Just made that up just my random theory after just reading that, but it may be kind of a silver lining here where they're, yes, they're having to fold one of their major companies, but they won't have to chapter 11, which I think they already missed their window to chapter 11 genesis, maybe
The Café Bitcoin Podcast
"dcg" Discussed on The Café Bitcoin Podcast
"Free thinking people, it's actually destroying the ideologues credibility for free thinking people. It's the opposite effect of what they think is happening. Like all the drones are going to be like, oh, Jordan Peterson bad. But everybody else is like, wow, you guys are a bunch of douchebags. All right, moving on. I'm going to lay a little baseline stuff for what's going on for people who aren't following it, and then we'll jump into this Gemini cofounder, one of the winklevoss, winklevoss, is claiming the DCG has acted in bad faith. And solbert has replied to this. So Cameron winklevoss alleged Barry silbert DCG of engaged in stall tactics ever since genesis global capital, a wholly owned crypto trading platform halted withdrawals back in November. So there's some, there's a big outstanding loan, $900 million to Gemini earned customers and other creditors. And basically he's saying that sober is not cooperating. And he's in his letter. He says, you continue to get into a room with us to hash out a solution. In addition, you continue to refuse to agree to a timeline with key milestones every time we ask you for tangible engagement, you hide behind lawyers, investment bankers, and process. They further allege that Barry has taken $1.67 billion from genesis to fund share buybacks and make investments in illiquid ventures to make grayscale trades. I don't know about all that, but it's pretty wild. So, Joe, do you want to weigh in here with some thoughts? Yeah, so first off, happy new year, everybody. Hope you'll find health wealth and happiness in the new year. Thanks for having me up, Alex. So from my standpoint here, it's really hard to know without looking at the source documentation much of which was not public. I mean, I did see buried disputed this notion about the 1.6 billion from genesis and he said that DCG has never missed a payment to genesis since current all loans. You're not going to know some of this stuff until at least a couple of weeks from now when we get some new quarterly filings. So it's really hard to sort that out. But in terms of just a credibility test, I would probably side just, you know, gun to my head with the winkle eye. I actually trust them more than I do very silver. I more interested on the efforts I know of at least three groups, one of which is Valkyrie that is focused on efforts to organize and remove this bond from D.C., GBTC. That's really what I've been looking at. One of which I'm intimately familiar with, but I can't yet talk about publicly. The couple other ones that are talking publicly, I think that's far more fascinating and hopefully that actually snowballs into something real. All right, open floor Lake, whoever else has anything tone, Matt. I got a question for you. So I was preparing for this so I can talk about this slightly more intelligently. Have you read the lawsuit by virtue of value master fund? I guess gray scale. So I write that thing and to me it just sounds like complaint letter on the same level as winkle white twins. I don't see a lawsuit there. A lot like I think this stuff is completely silly. Like, look, we're not happy with Barry.
The Breakdown
"dcg" Discussed on The Breakdown
"Last Tuesday, a class action lawsuit was filed against Gemini, claiming that the exchange had violated securities laws and failing to register their earned product as a security. Then just today, three Gemini earned users filed a request for class action arbitration against genesis in DCG. Now class action arbitration is radically oversimplifying, of course, a less expensive, faster version than a class action lawsuit. From coin desk, quote, the claimants allege genesis had failed to return there in all Gemini earned users digital assets as required under the master agreements between the firm and users. They claim genesis first breached the master agreement when the firm became insolvent in the summer of 2022, but concealed its insolvency from customers. Genesis then they allege engaged in a sham transaction with its parent company DCG to conceal the insolvency, exchanging the right to collect $2.3 billion debt owed to genesis by the now insolvent hedge fund three arrows capital for a promissory note of 1.1 billion due in 2033. The group also claims that genesis master agreement effectively is creating unregistered sale of securities and are seeking to rescind the contracts of sale and related damages. So in terms of the specifics of what is going on, Arri Paul tried to break it down. The CIO of block tower wrote, as long as DCG and genesis never did any cross party transactions that weren't fully disclosed and were arms length, then what Cameron is saying is relevant. If not, then not. For anyone following along at home, Barry is claiming DCG and genesis are entirely separate entities such that genesis liabilities don't extend to DCG. That's true if they really were entirely separate economic entities. It's false and courts will find it false if genesis and DCG engaged in transactions with each other that were different from how either would treat a random third party and disadvantage either side. In this case, it doesn't seem like genesis would be in default right now without the DCG favors. Meaning that corporate veil likely to be pierced. Courts can decide. Regardless, there's a lesson here for everyone. When you do business with a person or company, you may really be engaging with some subsidiary the person in holding company will then try to disown. Now this question of commingling and Vail piercing is the key. Autism capital wrote DCG is turbo screwed. Barry silbert is trying to sequester genesis as its own problem to avoid personal responsibility, but everything is commingled beyond belief. Gemini also looking to burrito bone as they're facing a huge class action and want to rip bury alive.
Coin Stories with Natalie Brunell
"dcg" Discussed on Coin Stories with Natalie Brunell
"Now, if they decide to liquidate the trust, that would be a whole different scenario, and that would be in the event of a DCG bankruptcy where they would decide to liquidate the trust. But they can't technically they can liquidate it in the worst case scenario. Yeah, that would be a nuclear option. You got to understand they would only be doing that. It would basically be killing their business because grayscale is their number one asset. It's a cash cow to liquidate the trust would be for them to voluntarily do that. This is why I say it would probably only happen under bankruptcy their bankruptcy DCG bankruptcy, which is different than genesis of bankruptcy. But in that event, there is language in the charter that they have the sole discretion to liquidate the trust, but even then it's in their discretion whether or not it gets paid out in dollars or in kind in Bitcoin is another question altogether from the language in the charter it seems like that would be up to them to do that. Now here's where it gets where shareholders actually have some kind of power here. Is in the event of a DCG bankruptcy, shareholders from the language in the charter if they are greater than 50% of the shareholders vote, they could say no, we don't want to liquidate the trust. We want to move the trust to a different sponsor instead. And so that's what the power they have in the event of a bankruptcy. So it's very unlikely that DCG will decide to liquidate the trust because it would kill their baby and kill their grayscale Bitcoin trust. And it would end their business essentially. But in the event of a bankruptcy, shareholders, if they vote greater than 50% could prevent the liquidation of the trust and have it moved to a different sponsor, it's probably why you saw there was a Valkyrie, which is another type of fund that puts out all these ETFs and stuff. They raise their hand and they were like, hey, I have a proposal. We
CoinDesk Podcast Network
"dcg" Discussed on CoinDesk Podcast Network
"We expressed our belief quote that getting everyone in a room together as soon as possible will be the most productive path towards reaching a resolution. You agreed but stated you would only do so after there was a proposal on the table. On December 17th, the proposal was delivered to you. On December 25th, Christmas Day, an updated version of this proposal was delivered to you. Despite this, you continued to refuse to get into a room with us to hash out a resolution. In addition, you continue to refuse to agree to a timeline with key milestones. Every time we ask you for a tangible engagement, you hide behind lawyers, investment bankers and process. After 6 weeks, your behavior is not only completely unacceptable, it is unconscionable. The idea in your head that you can quietly hide in your ivory tower and that this will all just magically go away or that this is someone else's problem is pure fantasy. To be clear, this mess is entirely of your own making. Digital currency group DCG of which you are the founder and CEO, owes genesis a totally own subsidiary, 1.675 billion. This is money that genesis owes to earn users in other creditors. You took this money, the money of school teachers, to fuel greedy share buybacks, a liquid venture investments, and kamikaze grayscale nav trades that balloon this fee generating AUM of your trust. All of the expensive creditors and all for your own personal gain. It is now time for you to take responsibility for this and do the right thing. It is not lost on us that you started your career as a bankruptcy restructuring associate. And it's not lost on us that you've been working desperately to try and firewall DCG from the problems that you created at genesis. You should dispense with this fiction because we all know what you know. The DCG and genesis are beyond commingle. Everyone takes orders from you and always has. And anything you have done after the fact to pretend otherwise won't hold up. If instead you would put all this energy towards finding a resolution, we would have been done by now. Everyone would be in a better place, including you. Earn users are tired. They're scared. Many are now in Dire Straits. And yet despite all that they have had to endure, they have been remarkably patient and supportive. But there is only so much more they can take. They deserve a resolution for recovery of the assets they lent to you and an end to this nightmare. To that end, and for the final time, we are asking you to publicly commit to working together to solve this problem by January 8th, 2023. We remain ready and willing to work with you, but time is running out. Sincerely, Cameron winklevoss. Now this is obviously a major rhetorical escalation. It is written very clearly not just for Barry, but for the public size as well. And despite his relative quietness on Twitter over the last two months, Barry silbert did think it worthy of response. He replied to winklevoss tweet saying DCG did not borrow 1.675 billion from genesis. DCG has never missed an interest payment to genesis and his current on all loans outstanding. Next loan maturity is May 2023. DCG delivered to genesis in your advisers a proposal on December 29th and has not received any response. To which Cameron winklevoss then replied saying there you go again. Stop trying to pretend that you and DCG are innocent bystanders and had nothing to do with creating this mess. It's completely disingenuous. So how does DCG O genesis 1.675 billion if it didn't borrow the money? Oh right, that promissory note. Will you or will you not commit to solving this by January 8th in a manner that treats the $1.1 billion promissory note as $1.1 billion? Now, part of what's fueling all the intensity around this exchange is growing discontent among Gemini customers. Last Tuesday, a class action lawsuit was filed against Gemini, claiming that the exchange had violated securities laws and failing to register their earned product as a security. Then just today, three Gemini earned users filed a request for class action arbitration against genesis in DCG. Now class action arbitration is radically oversimplifying, of course, a less expensive, faster version than a class action lawsuit. From coin desk, quote, the claimants allege genesis had failed to return there in all Gemini earned users digital assets as required under the master agreements between the firm and users. They claim genesis first breached the master agreement when the firm became insolvent in the summer of 2022, but concealed its insolvency from customers. Genesis then they allege engaged in a sham transaction with its parent company DCG to conceal the insolvency, exchanging the right to collect $2.3 billion debt owed to genesis by the now insolvent hedge fund three arrows capital for a promissory note of 1.1 billion due in 2033. The group also claims that genesis master agreement effectively is creating unregistered sale of securities and are seeking to rescind the contracts of sale and related damages. So in terms of the specifics of what is going on, Arri Paul tried to break it down. The CIO of block tower wrote, as long as DCG and genesis never did any cross party transactions that weren't fully disclosed and were arms length, then what Cameron is saying is relevant. If not, then not. For anyone following along at home, Barry is claiming DCG and genesis are entirely separate entities such that genesis liabilities don't extend to DCG. That's true if they really were entirely separate economic entities. It's false and courts will find it false if genesis and DCG engaged in transactions with each other that were different from how either would treat a random third party and disadvantage either side. In this case, it doesn't seem like genesis would be in default right now without the DCG favors. Meaning that corporate veil likely to be pierced. Courts can decide. Regardless, there's a lesson here for everyone. When you do business with a person or company, you may really be engaging with some subsidiary the person in holding company will then try to disown. Now this question of commingling and Vail piercing
Bankless
"dcg" Discussed on Bankless
"Took on the liability of genesis, the whole in genesis bounce balance sheet, but they didn't have the cash to give genesis for its hole in the balance sheet. So they took out a $1.1 billion ten year loan from genesis, and then they gave the money back to genesis to fill the gap. But up at a whole totally plug, right? It's totally crazy. How many people were just swimming with no pants back in June, and we didn't know. And it was because of the blow up. Three years capital blow up. And these were one of them. It was kind of tenuous at that time for DCG. So the $1.1 billion came from the lending book, Gemini urn and other retail yield products that use genesis oof. So retail is paying for this. Essentially, genesis borrowed from their own deposits that fill the hole but use digital currency group as the go between to make it legal. Also there's another 105 $175 million loan to do in May of 23. So that's not that far away. So this explains why investors are balking with DCG. This is clearly not fully above board, what next genesis has a liquidity shortfall of 1.675 billion right now to the depositors of the lending book, it needs to file for bankruptcy. I suspect that they will, they were trying to get someone to buy out DCG ten year bond at some discount to give liquidity to depositors, but no takers. DCG grayscale business, the grayscale business from DCG is extremely valuable. So here's what they did. Genesis was insolvent. DCG bailed it out. And so the equity holders of DCG are now at stake. The other thing that is in DCG is grayscale. And so since it was basically the equity of DCG that plugged the genesis hole. But the equity of DTG is involved with gray scales. And by the way, grayscale is minting money. I think you have a chart later on that's like what grayscale and by the way, the grayscale products are what you can buy trading accounts and trust. This is where you can kind of buy proxy trust type ETF products, not ETFs, but those types of products inside of your retirement account.
Bankless
"dcg" Discussed on Bankless
"Thank you. Alameda, saving the day. And that's why at this point in the cycle, you were like, well, if Alameda is bailing companies out, they must be doing okay. Right. Must have cash while everyone else is underwater. And so that seemed to be bullish for Sam's empire that the House of Sam coin here. And that's the first of two. FTX also backstops BlockFi to keep them solvent. So block 5 valuation drops down to as low as $25 million after being as high as $5 billion just a year prior. And FTX gives BlockFi a $4 million line of credit to keep customers liquid. And the quote from this article, FTX, CEO, Sam bankman fried has been seen as the lender of last resort in the space. In addition to BlockFi, sandbank from freedom company, Alameda research also provided a $5 million loan to Voyager. So this is where SPF really rose and saved the day, like everyone else was insolvent, FTX seemed to be the one solvent one in the room, and he just bought up and backstopped the entire industry. Turns out that that was not the case. It turns out that he was not the lender of last resort. That turned out to be genesis, which will get there. This is a Zach prince's thread announcing very happily announcing that he was going to be able to restore customer deposits thanks to FTX. It was really a lifeline at that time. He was gone under without it. Meanwhile, the Domino's continued to follow three hours capital files for bankruptcy in the British virgin isles. This was announced on July 1st on July 18th, genesis was discovered to have lent $2.36 billion to three errors capital using only an 80% collateral margin requirement. And so 20%, 20%, $2.4 billion. That hurts. And then of course they are seeking repayment of the outstanding debt through arbitration in New York, a spokesperson told for a DCG told the block that both DCG and genesis balance sheets remain strong with no remaining exposure to three hours capital, genesis continues to be well capitalized and its operations are business as usual. That might have been true.
CoinDesk Podcast Network
"dcg" Discussed on CoinDesk Podcast Network
"It is Friday, November 18th and today we are once again looking at contagion and fallout because that is where this industry is right now. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review or if you want to dive deeper into the conversation. Come join us in the breakers Discord. You can find a link in the show notes or go to bit LY slash breakdown pod. All right, Friends, as I said, we are closing out the week following as we have been all week. The recent contagion coming out of FTX. And I want to be clear that some amount of this is speculation conjecture and I don't ever want the breakdown to be contributing to rumors or fear or FUD, but the reality is is that right now we've lived through too many episodes of where there's smoke there's fire to write things off with best case scenario planning. In fact, I think responsibly starting to think through scenarios. They give people a chance to imagine how it might impact them and their assets. Is within reason, the only responsible thing to do. So we're going to start with genesis and DCG as that is where everyone's heads have been out for the last 24 or 48 hours. Now, to recap quickly, genesis has had a rough year. They had a huge amount of exposure to three arrows capital, some $2.4 billion in loans. Their parent company DCG took over those loans and is now a $1.2 billion creditor of three AC. They had other losses with Babel finance, their head Michael morrow stepped down, and now they've been caught up in FTX as well. Initially, genesis said they only had $7 million in exposure to FTX, but revised that up to 175 million. They got an injection of a 140 million from parent company DCG, who is it should be noted also the parent company of coin desk, but it appears that there are still troubles. On Wednesday, Jason yanowitz from block works wrote this thread explaining what was going on and why it was a big issue. If this really is the end for genesis, he writes, this could be more impactful than FTX. FTX hurt liquid funds and consumers, genesis impacts nearly every company in crypto. Let's dig in. For those who aren't familiar, genesis started as the first OTC Bitcoin desk in 2013. They're now crypto's largest lending desk. Genesis is part of DCG. Barry silbert's holding company that owns coin desk, foundry, genesis, grayscale, and Luna. DCG also runs a huge PC firm. At the height of the market, genesis was moving size. Check out these Q four 2021 numbers. 50 billion in loan originations. 12.5 billion in active loans. 31 billion in spot volume traded, 21 billion in derivatives traded. Then three arrows capital happened. Genesis was the biggest creditor to three AC, having lent them a whopping 2.4 billion. Genesis then filed a $1.2 billion claim against three AC. DCG, the parent company stepped in and assumed the $1.2 billion claim. Leaving genesis with no outstanding liabilities tied to three AC. But then, things continued to unravel. Genesis also had large exposure to Babel finance, the C 5 platform that got hit hard in the June unwind. In August longtime CEO Michael morrow resigned.