The crypto community woke to another drama-filled day after the Digital Currency Group (DCG) chief’s letter to shareholders went wrong. DCG CEO, Barry Silbert, penned a letter to the shareholders on Jan. 10, reflecting on the state of the crypto market and the growing fear, uncertainty and doubt (FUD) around the company. DCG is the parent company of crypto lending firm Genesis Global Capital and Grayscale, the world’s leading crypto asset manager.
In the letter, Silbert addressed the growing issues around DCG and its subsidiaries owing to the bear market and FTX contagion. He said that bad actors and the implosion of leading crypto companies had wreaked havoc on the industry. He noted, "DCG and many of our portfolio companies are not immune to the effects of the present turmoil.”
I’m incredibly proud of the role that DCG & I have played as pioneers & builders over the past decade. We’ve invested in >200 companies that have developed & shaped the industry, we’ve helped build the first publicly-quoted BTC fund, the largest asset manager in the space..(2/10)— Barry Silbert (@BarrySilbert) January 10, 2023
In the latter half of the letter, Silbert addressed some raging questions about DCG’s relationship with FTX, the loan agreement with Genesis and more. He said that Genesis had a “trading and lending relationship” with Three Arrows Capital and had invested $250,000 in FTX’s Series B funding round in July 2021. DCG also borrowed $500 million between January and May 2022 at interest rates of 10%-12% and currently owes Genesis $447.5 million and 4,550 Bitcoin (BTC), worth $78 million, which matures in May 2023.
Related: It'll be OK: DCG crisis likely won’t ‘include a lot of selling’ — Novogratz
However, what puzzled the crypto community more was that Silbert avoided addressing accusations by Cameron Winklevoss that came just hours before his letter. Winklevoss penned an open letter to the board of DCG on Jan. 10, saying CEO Barry Silbert was “unfit” to run the company. He also accused Silbert of defrauding customers and hiding behind lawyers. Genesis reportedly owes Gemini $900 million.
One Twitter user wrote that the letter indicates that people might not get their money back. Another user questioned Silbert’s tactics of buying GBTC shares by selling borrowed BTC and wrote:
“So you borrowed Bitcoins, sold them, and bought GBTC shares? Not sure how you “hedge” GBTC long positions with Bitcoins otherwise.”
Other crypto community members accused Silbert of deflecting the allegations and called the letter a “PR tactic."
Laymen terms! I'm Rekt and can't pay @cameron @tyler @Gemini but I did some neat things along the way! https://t.co/8ZzrE5KIyZ— KingKong (@KingKon43801491) January 10, 2023
A few users went on to compare his tactics to that of Terraform Labs co-founder Do Kwon, while others speculated that the letter hinted that Silbert might lose his job in the coming weeks.