GIC says it expects volatility in its investment into cryptocurrency conglomerate DCG

   2022-11-24 01:11



Singapore’s GIC, or Government Investment Corporation says it expects volatility to remain high when asked by local media, Straits Times in regards to its investment in Digital Currency Group (DCG).

DCG is a cryptocurrency conglomerate that owns businesses such as crypto news site CoinDesk, prime brokerage and institutional lending firm Genesis, and asset manager Grayscale Investments.

It raised US$700 million in secondary funding at a US$10 billion valuation in November last year which included investors such as Alphabet’s CapitalG, Ribbit Capital, GIC Private Limited, Tribe Capital, and Emory University.

“Proud to welcome SoftBank, CapitalG, Ribbit, GIC, Tribe and Emory to an already fantastic list of DCG shareholders. And even more proud of over 1,000 employees of DCG and our wholly-owned subsidiaries that made this happen,” DCG Founder and CEO Barry Silbert said in a statement.

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Just two days ago, Bloomberg reports Genesis executives spent the weekend scrambling to raise fresh cash from investors to deal with a liquidity crunch, warning it may need to file for bankruptcy unless it can access at least US$1 billion in capital.

“We have no plans to file bankruptcy imminently,” the company said in an earlier statement to Bloomberg.

“Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors.”

This came after Grayscale, which operates the world’s largest bitcoin fund, set off alarm bells in the market on Friday after refusing to share proof of reserves with customers, citing “security concerns”.

In a shareholder letter sent to investors on Tuesday, Mr Silbert outlined the state of the company’s lending situation.

He revealed that DCG currently has a liability to Genesis Global Capital of ~US$575 million, which is due May 2023 and has a $350 million credit facility from a group of lenders led by Eldridge Industries.

Mr Silbert also confirms the existence of a $1.1 billion promissory note connected to the collapse of Three Arrows Capital.

Volatility to remain high: GIC

When asked about GIC’s investment in DCG, the sovereign wealth fund told The Straits Times that it does not comment on individual investments.

It added: “In the short term, we expect volatility to remain high. Over the long term, we continue to focus on the development of blockchain technology and business models.”

It was earlier reported that Genesis Asia Pacific, a subsidiary of Genesis Group, was granted an in-principle approval by the Monetary Authority of Singapore (MAS) to offer digital payment services under the Payment Services Act 2019.

MAS also shared that Gemini Trust Company now has an exemption from licensing.

Both entities are currently not licensed and also not on MAS’ investor alert list.

In light of the suspension of withdrawals by digital currency broker Genesis Trading and platform Gemini Trust Co, MAS says it will factor in these developments in their local entities’ licence applications.

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