Original: Trustnodes , compiled by The Way of DeFi.
Barry Silbert, who was on the Hurun Rich List in early 2022 with a net worth of $25.5 billion, the boy who used his bar mitzvah to trade baseball cards for a profit, now has no money up.
Image Credit: Generated by Maze AI
Forbes, which estimates net worth, says Silbert is now worth $3 billion to nothing.
In a letter to investors, Silbert said Digital Currency Group (DCG), which he founded in 2015, has $2 billion in debt.
"DCG currently has approximately $575 million in liabilities to Genesis Global Capital, due in May 2023," he said, adding:
“You may recall that there was a $1.1 billion promissory note due in June 2032, [because] DCG stepped in and assumed some of Genesis’ liabilities related to Three Arrows Capital’s default …
Aside from a Genesis Global Capital intercompany loan and a long-term promissory note due in May 2023, DCG's only debt is a $350 million line of credit from a small group of lenders led by Eldridge. "
Silbert also revealed that their 2022 revenue is $800 million. He did not specify their expected profit or loss.
He owns about 40% of DCG, which has invested in numerous entities including Coinbase, FTX, Coindesk, Blockstream, and 200 other companies (mainly cryptocurrency companies).
However, "Forbes estimates that DCG's outstanding debt is worth more than the fair market value of its assets in current market conditions; DCG may also struggle to afford illiquid bets." For these reasons, Forbes estimates the current value of Silbert's 40% stake in DCG Around $0."
This does not include personal investments. In 2012, Silbert bought $175,000 worth of Bitcoin at an average price of $11.
He said in 2017, "I started buying bitcoin, you know, around $7, and my average cost price of bitcoin was $11. So when it went from $11 to $13, I thought I was a genius." . When it got down to $8, I thought I wasn't. But so far, so good."
The roughly 16,000 bitcoins he bought are worth roughly $250 million today, or roughly 10% of what DCG owes.
He also stated that he donated most of his bitcoin holdings to DCG, which still holds a “significant amount” of his original bitcoin.
Before launching the Bitcoin Trust in September 2013, Silbert ran SecondMarket, where employees of private companies could sell their shares.
He sold SecondMarket to Nasdaq for an undisclosed sum in 2015, but speculation at the time was that he sold it for $10 million.
DCG also fully owns Coindesk, rather than just holding some shares. They bought Coindesk in 2016 for half a million.
Coindesk is believed to be losing money, and their annual conference (the "Consensus Conference" held every year) is just to subsidize their main business.
That said, Silbert is probably really worthless considering the debt, although he did buy ETC for 50 cents in 2016.
However, assuming he does the same with ETC as he does with Bitcoin, using them to bootstrap the Ethereum Classic Trust, they will only be worth around $100 million even if no one else invests in the trust.
This dire financial situation, with some arguing that Grayscale has been losing money since February 2021, when the premium turned into a discount even though they still had revenue, may explain why it took so long for DCG subsidiary Genesis to Solve the suspension of withdrawals that started last November.
The Wall Street Journal reported that Genesis would lay off another 30 percent of its workforce, "and that the company is considering filing for Chapter 11 bankruptcy, according to people familiar with the matter."
Gemini founder Cameron Winklevoss and an apparent committee of creditors have given DCG a January 8 deadline to repay the $900 million Genesis owes Gemini Earn.
Genesis has been trying to raise $1 billion from Binance and Apollo Global Management, but has so far failed to do so.
Bankruptcy would likely mean liquidation for Grayscale Trusts, although Silbert has attempted to isolate DCG and fight off any Genesis fallout.
Grayscale has an estimated 800,000 investors in these trusts, evenly distributed. Considering that most cryptocurrencies are down 80% or more, most people are likely to be holding, and if they become part of a bankruptcy, liquidation of these assets may take years.
For current Grayscale Trust shareholders, this doesn't make much of a difference, as they cannot be redeemed for physical bitcoin or ether. Their only hope is to convert the legacy trust into a spot ETF if Grayscale wins its case against the SEC, but the outcome of that case is uncertain and not expected anytime soon.
For crypto market access, there are now countless spot crypto ETFs in Canada and Europe, so there shouldn't be much of a difference.
But the DCG bankruptcy will change the crypto space, especially Bitcoin, as Blockstream will have less control over the Bitcoin protocol and Coindesk will have less influence.
However, it remains to be seen whether things will move forward in this way...though it may be within a few days.
