The crypto winter of 2022 has put severe stress on the balance sheet of DCG. The company is working on major restructuring with the blowup of its crypto lending subsidiary Genesis.
On Monday, February 27, crypto conglomerate Digital Currency Group (DCG) announced its results for the last year of 2022. The company reported a net loss of $1.1 billion amid heavy correction in the crypto space and the restructuring of its lending platform Genesis.
During the fourth quarter, DCG reported revenue of $143 million with a loss of $24 million. This was the time when DCG faced huge pains of liquidity crisis amid withdrawals at its crypto lending subsidiary Genesis Global. The consolidated revenue for the full year stood at $719 million. In its report obtained by CoinDesk, the crypto giant wrote:
“In addition to the negative impact of [bitcoin] and crypto asset price declines, last year’s results reflect the impact of the Three Arrows Capital (TAC) default upon Genesis”.
The consolidated balance sheet of DCG showed that the company held total assets of$5.3 billion as of Dec. 31, 2022. This includes cash and cash equivalents of $262 million.
Additionally, the company has $670 million spread across Investment assets such as Grayscale trust shares, tokens, venture and fund investments, etc. According to DCG, the rest of the assets consist mainly of assets held by divisions Grayscale and Foundry. A DCG spokeswoman clarified that the investment assets and the value of the venture portfolio have been marked to market.
As per the annual independent stock valuation, DCG has an equity valuation of $2.2 billion with a price per share of $27.93. “This appraisal is generally consistent with the sector’s 75%-85% decline in equity values over the same period,” the report added.
Digital Currency Group and Its Restructuring Process
One of the biggest challenges that the Digital Currency Group (DCG) faced in 2022 was the liquidity crisis faced at Genesis Global. After the collapse of the crypto exchange FTX in November 2022, Genesis suffered massive withdrawals and had to suspend them after a point. Last month, Genesis took the decision of filing for Chapter 11 bankruptcy.
Despite all these challenges, DCG said that it had “hit a milestone” regarding the restructuring of Genesis. It also pointed out the non-binding term sheet agreement that involves some of the main creditors. This agreement involves extending the maturity of its May 2023 obligation to Genesis Capital of approximately $600 million to June 2024.
Another part of restructuring is DCG’s infamous $1.1 billion promissory note, due this year. This will be against the issuance of a new class of convertible stock to Genesis Capital creditors.
Hopefully, DCG could sail through the challenges ahead this year of 2023.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
