GIC Predicts “Volatility” From Genesis Exposure

GIC Predicts “Volatility” From Genesis Exposure
GIC
24 November 2022

Singapore sovereign wealth fund GIC, one of the investors of venture capital firm Digital Currency Group (DCG), has said that it will be expecting high volatility in the short term on its investments.

DCG which owns businesses such as Greyscale, Genesis Global Capital and crypto news publication CoinDesk, raised US$700 million in a funding round last year from investors including Softbank, Google parent company Alphabet’s Capital G and GIC.

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

“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 model,” it added.

Singapore’s state investment fund, Temasek, announced last week that it was writing off its US$275 million investment into cryptocurrency platform FTX International & FTX US “irrespective of the outcome of FTX’s bankruptcy filing.”

Read more: MAS Learns That Crypto is “Hazardous” After Temasek Writes Down US$275M

The FTX collapse has cast a spotlight on DCG, with Genesis Global Capital now tethering on the edge of bankruptcy and doubts growing over Greyscale’s financial health after the crypto asset management company refused to provide its proof-of-reserves, citing security concerns.

DCG founder Barry Silbert has attempted to allay fears, saying that despite the market downturn, the overall company is on pace to generate US$800 million in revenue this year on the back of just $25 million raised in primary capital since inception.

Read more: DCG – Et Tu, Barre?

“We have weathered previous crypto winters,” Silbert wrote in a note to shareholders on Tuesday, adding that “while this one may feel more severe, collectively we will come out of it stronger.” 

However, according to a New York Times article that cited three people familiar with situation, Genesis has since hired investment bank Moelis & Company to explore options including a potential bankruptcy. Last week, the company informed its clients that it would halting withdrawals due to liquidity issues.

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

Genesis is also the lending partner of Gemini. As a result, users of the exchange’s “Gemini Earn” service have been unable to redeem their funds. Gemini Trust Company is currently operating under an exemption from licensing in Singapore.

Local financial sector regulator MAS has said that both Genesis Asia Pacific and Gemini are not licensed, and it will take into account “all material developments” when assessing a licence application.

Blockhead Team
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