Digital Currency Group (DCG), the New-York based conglomerate that owns troubled crypto broker Genesis and digital asset manager Grayscale, witnessed a staggering loss of $1.1 billion in 2022 due to the decline in crypto asset prices and financial troubles at Genesis.
According to a recent report, citing DCG’s fourth-quarter investor report, Three Arrows Capital (3AC) failed loan repayments to Genesis also contributed to the loss.
“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,” DCG said in the report.
$5.3 Billion in Assets
Per the report, in the consolidated balance sheet perspective, DCG held total assets of $5.3 billion as of December 31, 2022, which included cash and cash equivalents amounting to $262 million. The company’s investment assets, including tokens, Grayscale trust shares, and venture and fund investments, amounted to $670 million, the report added.
The report revealed that the remaining assets consist mostly of assets held by DCG’s subsidiaries, Grayscale and Foundry. According to a DCG spokeswoman, all the investment assets and the value of the company’s portfolio have been marked to market.
DCG had an equity valuation of $2.2 billion, or a price per share of $27.93 in its annual independent stock valuation, according to the report.
“This appraisal is generally consistent with the sector’s 75%-85% decline in equity values over the same period,” the report stated.
$24M Loss in Q4
While DCG’s consolidated revenue for the whole of 2022 amounted to $719 million, its revenue for the fourth quarter was $143 million, with losses of $24 million, according to the report.
Despite the losses, DCG said it had “hit a milestone” in the restructuring of Genesis and reached a nonbinding term sheet agreement with some of its main creditors.
The agreement includes the extension of DCG’s May 2023 obligations to Genesis Capital of roughly $600 million to June 2024 and the restructuring of DCG’s $1.1 billion promissory note due in 2032. In exchange, a new class of DCG’s redeemable, convertible preferred stock will be issued to Genesis creditors.
