The troubled crypto broker Genesis Global revealed on January 12 that it carries obligations to creditors exceeding $3 billion. The revelation coincides when the crypto broker, alongside its parent company – Digital Currency Group (DCG)- embroiled in a public Twitter spat with Gemini Trust over $900 million debt.
Genesis Struggling to Settle Huge Debt
The report captured in a Financial Times publication indicated Genesis Global admitting financial shortfall. In the article published on January 12, the embattled Genesis has failed to refund the $900 million owed to Gemini. The revelation of financial struggles comes days after Gemini terminated the Earn service and announced prioritizing the recovery of the assets frozen by Genesis Global Since November 2022.
The disclosure of the weaker financial position at Genesis Global has prompted its parent Digital Currency Group (DCG) to consider disposing a portion of its holdings to settle the offset. DCG, known for its significant stake in digital asset trusts and Grayscale Investments, has battled accusations from the Gemini’s Winklevoss in the last week for deploying delay tactics to hinder refunding a $900 million claim.
Selling VC Portfolio
DCG is considering settling the shortfall in its Genesis Global subsidiary by selling a portion of the venture capital portfolio. Parties privy to DCG’s diversified portfolio indicated that the venture capital actively participates in over 200 crypto-oriented projects.
The anonymous party indicates that DCG’s venture capital participates in multiple projects, including custodians. DCG projects selling the VC portfolio valued at $500 million would help settle a portion of the obligation.
DCG is mulling selling a portion of the venture capital portfolio to generate fresh capital since most Genesis Global assets are illiquid.
Genesis Worsening Financial Health Revealed
The new twist suggests a worsening financial position for DCG and Genesis Global since the latter suspended withdrawals in November 2022. The latter cited the liquidity crisis attributed to the prevailing turmoil in the crypto market. However, the financial crisis runs deeper since Genesis announced a $140 million equity injection to cover losses linked with $175 million in funds trapped in the FTX.
DCG, which owns CoinDesk, is yet to release an official position. Nevertheless, the parent company has a diversified portfolio featuring blockchain.com, Coinbase, and Kraken.
It will take time for DCG to attract a reliable customer for its illiquid asset amid the ongoing crypto winter. Further delay would aggravate tensions with its creditors led by Gemini’s Cameron Winklevoss recently advocating for DCG chief Barry Silbert’s exit.Â
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