Suspended withdrawals at cryptocurrency brokerage Genesis amid the widening crypto-market meltdown have cast an unwanted spotlight on Barry Silbert, the man at the helm of the Digital Currency Group empire.
Silbert, who rarely does press interviews or speaks at the multitude of industry conferences, founded the Stamford, Connecticut-based crypto conglomerate DCG in 2015, according to the 46-year-old’s LinkedIn profile. Last year, DCG’s valuation reached $10 billion, after it sold $700 million of stock in a private sale led by SoftBank Group Corp. DCG had 66 employees at the start of November and holds more than 200 companies in its portfolio.
DCG’s reach is vast: in addition to embattled lender Genesis, it also controls digital-asset manager Grayscale Investments, which offers the world’s largest crypto fund. DCG is also the parent of crypto-mining service provider Foundry Digital, news publication Coindesk and exchange Luno, among others. DCG declined a request for an interview with Silbert.
Within the crypto space, DCG’s might is well-known. The private firm’s portfolio has over the years included everything from exchanges like Coinbase to hardware-maker Ledger to crypto-focused bank Silvergate.
“They’re a pretty big deal in crypto,” said Wilfred Daye, chief executive officer of Securitize Capital, a digital-asset management firm. “Their footprints are everywhere.”
With Genesis’s halted redemptions, the health of DCG is called into question, a spiral that follows the shocking blowup of the Bahamas-based crypto exchange FTX and its former chief executive, Sam Bankman-Fried. Genesis was the crown jewel of Silbert’s kingdom, having established itself as one of the largest and most well-known brokers, allowing funds and market-makers to borrow dollars or digital currencies to amplify their trades.
“There are many lessons to be learned here,” said Campbell Harvey, a finance professor at Duke University. “In the future, the level of due diligence will likely increase. It is no longer acceptable to have substantial exposure to opaque offshore entities -- no matter how popular their founders are.”
Silbert first bought Bitcoin in 2012, when the industry was in its early aughts. Among the firm’s earliest employees were Michael Moro, who departed the CEO role at Genesis in August, as well as Ryan Selkis, co-founder of researcher Messari, and Meltem Demirors, the chief strategy officer of rival digital-asset investment firm CoinShares.
Grayscale has been relatively unscathed by the latest upheaval -- the firm was quick to say on Wednesday that its products are functioning as normal. Even still, the asset manager is dealing with its own set of issues. The $10.7 billion Grayscale Bitcoin Trust (ticker GBTC) is trading at a record discount to the Bitcoin it holds, given that the trust’s structure doesn’t allow it to redeem shares. Grayscale sued the US Securities and Exchange Commission in June after the regulator denied the firm’s application to convert GBTC into an exchange-traded fund.
But even with the record discount, GBTC is seen as a cash cow for Grayscale -- and by extension, for DCG. The trust charges shareholders a 2% annual fee. That means that even though GBTC has shed billions of dollars in value since total assets peaked at more than $40 billion last November, Grayscale would still collect more than $200 million in fees from the trust per year at current asset levels, according to calculations by Bloomberg.