Crypto Conglomerate Digital Currency Group Reports Loss of $1.1B in ‘Challenging’ 2022

Cryptocurrency conglomerate Digital Currency Group (DCG) reported a loss of $1.1 billion last year as the firm struggled with plunging crypto prices and the restructuring of its lending platform, Genesis.

“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 its fourth-quarter investor report.

DCG is the parent company of CoinDesk.

From a consolidated balance sheet perspective, DCG held total assets of $5.3 billion as of Dec. 31, 2022, the report said. This included cash and cash equivalents of just $262 million. Investment assets, including tokens, Grayscale trust shares, venture and fund investments amounted to $670 million. The remaining assets consist mostly of assets held by divisions Grayscale and Foundry, according to DCG.

A DCG spokeswoman said all the investment assets and the value of the venture portfolio have been marked to market.

DCG’s Q4 revenues were $143 million, with losses of $24 million. Consolidated revenues for the full year were $719 million.

In its annual independent stock valuation, DCG had an equity valuation of $2.2 billion, or 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 said.

Despite the challenges of last year, DCG said it had “hit a milestone” regarding the restructuring of Genesis, pointing to a nonbinding term sheet agreement involving some of the main creditors.

The agreement involves extending the maturity of DCG’s May 2023 obligations to Genesis Capital of approximately $600 million (at current market prices) to June 2024. Also included is the restructuring DCG’s infamous $1.1 billion promissory note, due in 2032, in exchange for the issuance to Genesis Capital creditors of a new class of DCG redeemable, convertible preferred stock.

Negotiating definitive transaction documents and soliciting votes on a reorganization plan is expected to take several months, said the report.