Key Takeaways
- In a shareholder letter, Digital Forex Group revealed that it has borrowed $575 million from Genesis International Capital, its personal subsidiary.
- Silbert additionally revealed the existence of a $1.1 billion promissory be aware related to the collapse of Three Arrows Capital.
- DCG additionally has a $350 million credit score facility from a bunch of lenders led by Eldridge Industries.
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Digital Forex Group (DCG) at present has $2 billion price of loans in accordance with a letter despatched to shareholders at the moment.
DCG Outlines Lending Scenario
In a shareholder letter despatched to traders on Tuesday, Digital Forex Group CEO Barry Silbert outlined the state of the corporate’s lending state of affairs.
Most notably, the letter reveals that Digital Forex Group’s subsidiary firm, Genesis International Capital, lent greater than half one million {dollars} to DCG itself. “DCG at present has a legal responsibility to Genesis International Capital of ~$575 million, which is due Could 2023,” Silbert wrote.
The monetary relationship between the 2 firms is already controversial. Genesis halted withdrawals on November 16. The corporate sought a $1 billion emergency mortgage within the days earlier than that call, however was finally unsuccessful in securing the requested funds.
In at the moment’s shareholder letter, Silbert acknowledged that there was “chatter about intercompany loans” however stated these loans had been made “within the strange course of enterprise.” He concluded that DCG borrowed cash from Genesis “in the identical vein as tons of of crypto funding corporations.”
The letter additionally says {that a} $1.1 billion promissory be aware exists. That promissory be aware is related to the collapse of Three Arrows Capital (3AC) and is due in June 2032. Silbert explains DCG “stepped in and assumed sure liabilities from Genesis” following the collapse of 3AC and that it’s now concerned in liquidation proceedings.
Lastly, DCG stated that its solely different debt is a $350 million credit score facility from a bunch of lenders led by Eldridge Industries.
Reviews on Monday recommended that Genesis may file for chapter if it fails to lift funds. The corporate explicitly denied these experiences on the identical day and stated that it had “no plans to file chapter imminently.”
Immediately, Silbert tried to additional guarantee purchasers that DCG and its subsidiaries stay steady. He wrote that DCG has “weathered earlier crypto winters” and that it’ll “come out of [this one] stronger.” He says that DCG has raised $25 million in capital and expects to usher in $800 million of income this yr.
Nonetheless, the corporate’s future is unclear, given the continued monetary turmoil which impacts the crypto market.
Disclosure: On the time of writing, the writer of this piece owned BTC, ETH, and different digital belongings.