Digital Currency Group
Digital Currency Group (DCG) is a Connecticut-based venture capital company focused on the digital currency market. DCG accelerates the development of financial systems by building and supporting blockchain and digital currency companies by leveraging network, insights, and access to capital. [1][10]
History
Digital Currency Group was launched in 2015 by Barry Silbert, who previously founded SecondMarket, Inc. He began investing in Bitcoin companies in 2013. First, as an angel investor
In 2015, Silbert sold SecondMarket to NASDAQ. Shortly after SecondMarket’s sale, Silbert formed Digital Currency Group, with Genesis and Grayscale becoming the first of the company’s subsidiaries. In November 2021, the firm relocated its Manhattan headquarters to Stamford, Connecticut. [1][10]
Subsidiaries
Genesis
Founded in 2013, Genesis Global Trading is a subsidiary of DCG. It is a cryptocurrency trading, lending, and asset custody platform, targeting institutional clients and high-net-worth individuals. [11]
Genesis acquired the London-based cryptocurrency custodial company Volt in early 2020. [12]
In late June and early July 2022, Genesis publicly disclosed that it was exposed to hundreds of millions of dollars in losses from loans to both the Hong Kong-based cryptocurrency lender, Babel Finance and the bankrupt cryptocurrency hedge fund, Three Arrows Capital (3AC), and that its parent company DCG had taken on some of Genesis' debts to keep the company afloat. On August 17, 2022, Genesis CEO, Michael Moro resigned to serve in an advisory position, while COO Derar Islim became interim CEO. [11]
In May 2022, it was reported that DCG had missed a $630 million payment to Genesis while owing the unit $1.65 billion. The firm stated that:
"Due to the state of the broader economy and prolonged crypto winter, along with the challenging regulatory environment for digital assets in the U.S, it shut down TradeBlock on May 31, 2023."
In July 2023, Gemini sued DCG in New York citing fraud, with the intent of reclaiming funds. In August 2023 DCG reportedly faced an unannounced probe by the New York Attorney General(NYAG), seeking information related to the financial dealings of DCG's subsidiary Genesis. [13]
On January 19, 2023, a new Chapter 11 deal was agreed on with DCG, lender Genesis Global, and a major creditor group in late August 2023. The agreement involved paying out up to 90% of the amount owed to Genesis customers using new loans. [13]
In October 2023, the NYAG (New York Attorney General) filed a lawsuit against DCG, Gemini Trust, and Genesis Capital for allegedly defrauding more than 230,000 investors of more than $1.1B. The companies allegedly lied to the investors over the expected returns of their investments and regarding their safety, while also concealing losses from them and the public. DCG replied that they would fight the claims and that they were shocked by the baseless allegations.[9]
On January 6, 2024, DCG announced it had cleared all of its short-term loans due to the now-defunct crypto lending platform Genesis. In a statement released on X (formerly Twitter), DCG confirmed that it is up-to-date on its financial obligations, including paying approximately $700 million to Genesis as part of the over $1 billion paid to creditors in the past year.[14]
“DCG is pleased to announce that we have completed a payoff of all short-term loans from Genesis. In total, DCG has paid off more than $1 billion of debt to its creditors in just over a year, including nearly $700 million to Genesis, satisfying all obligations currently due.”[15]
On January 8, 2024, Genesis creditors said in court papers filed in the Southern District of New York Bankruptcy Court that DCG has a substantial debt remaining. Unpaid interest and late fees amount to $26 million, the creditors told the court. In addition, there is a question about the form of payment: [16]
“Nothing in the Partial Repayment Agreement permits the DCG Entities to satisfy their USD and BTC [Bitcoin] obligations in any asset other than USD and BTC and certainly not via the transfer of illiquid instruments which cannot be monetized or distributed to creditors in satisfaction of their claims against the Debtors.”[16]
A statement of the official committee of unsecured creditors also filed on Jan. 8, 2023, indicated that DCG stated that, under the partial repayment agreement as amended on Nov. 28, 2023, DCG agreed that the aggregate principal amount of its loans was 2,737.77102141 BTC and 14,048 Bitcoin Cash, with late fees of 10.12600241 BTC. [16]
Grayscale
Established in 2013, Grayscale is a digital currency investing firm. Grayscale also manages the Grayscale Bitcoin Investment Trust (GBTC), which was the first publicly quoted securities solely invested in, and deriving value from, the price of Bitcoin when it launched in 2013. As of April 2021, six of Grayscale’s funds were traded publicly on the OTCQX market and is only available to accredited investors. [2]
Grayscale Bitcoin Trust was approved for public trading by the U.S. Financial Industry Regulatory Authority (FINRA) in 2015. On January 21, 2020, Grayscale Bitcoin Trust became the first digital currency financial product to become a Securities and Exchange Commission reporting company. [2]
In 2018, Grayscale launched the Grayscale Digital Large Cap Fund, which allows a customer to invest in a group of prominent digital currencies. The fund was approved to trade on public markets by the FINRA in October 2019. In May 2022, it was reported that Grayscale would list an exchange-traded fund (ETF) for the first time in Europe. [2]
CoinDesk
CoinDesk is a global media, research, and events platform that was acquired by Digital Currency Group in 2016. The company is best known for its coverage of blockchain’s daily news, Bitcoin Price Index and data tools, and its tutorials and research products, including the quarterly State of Bitcoin report. CoinDesk also hosts a conference on digital currencies and blockchain technologies titled Consensus, last held in May 2018 in New York City and hosted approximately 8,500 attendees. [3]
On November 20, 2023, Bullish announced that it had acquired CoinDesk from DCG. Bullish Global plans to invest in CoinDesk’s global expansion and the growth of the media, events, and indexing businesses. CoinDesk will continue to be led by Kevin Worth and the existing management team and operate as an independent subsidiary within the Bullish Group.[6]
Luno
Established in 2013, Luno, an independent operating subsidiary of Digital Currency Group, is a crypto exchange. The DCG Expeditions team works closely with Luno Global, to leverage Luno's global footprint and operating experience. They rebranded from Luno Expeditions to DCG Expeditions, to emphasize the link with DCG. [4][5]
In September 2020, DCG acquired Luno, with other operations in Cape Town and Singapore. At the time of the acquisition, Luno had more than 5 million customers.[7]
Foundry
Foundry Services, established in 2019, sets up and manages Bitcoin mining operations in the United States and Canada. In addition to setting up and operating its own cryptocurrency mining equipment, Foundry also provides financing, specialized digital mining equipment, and expertise to other digital currency startups. [8]
In the summer of 2021, Foundry helped relocate over $300 million worth of equipment from China to North America following the government's shutdown of many cryptocurrency mining operations.[5]
Bloomberg reported in April 2023 that, Foundry would stop offering free Bitcoin mining services, and between April 19 and April 22, 2023, would instead levy a pool fee on members. The service had been free since 2019. [8]
DCG Expeditions
It is a small global team within the Digital Currency Group with diverse backgrounds and expertise spanning crypto, fintech, early-stage tech, and emerging market investing, supporting world-class founders. DCG Expeditions is DCG’s team focused on backing early-stage founders (pre-seed, seed) in building the next generation of financial services. [4]
