After beginning 2023 within the depths of a bear market, the crypto empire Digital Foreign money reported a powerful fourth quarter, in addition to a valuation of $4.4 billion and an funding portfolio of almost $1 billion, in a letter despatched to shareholders on Monday.
For fiscal yr 2023, DCG reported EBITDA of about $275 million, up from $261 million in 2022, as consolidated income declined to $749 million from $813 million. Quarter-on-quarter EBITDA rose greater than 40% to almost $100 million, because the fourth quarter in 2022 produced a lack of $7 million.
Based in 2013, the Barry Silbert-led firm has lengthy been a bedrock of the crypto trade, with portfolio firms together with the asset supervisor Grayscale, the lender Genesis, and, till final yr, the commerce publication CoinDesk.
Because of its excellent loans via Genesis, Digital Foreign money Group started flailing with the failure of the hedge fund Three Arrows Capital in 2022. The collapse of one other key counterparty, FTX, drove Genesis into bankruptcy in early 2023, embroiling DCG in a collection of lawsuits with former partners and regulatory companies, together with the Securities and Exchange Commission and the New York Office of the Attorney General.
After a disastrous 2023, which included public spats between Silbert and the Winklevoss twins, Monday’s shareholder letter goals to assist dispel doubts concerning the imperiled empire, at the same time as lawsuits proceed to swirl.
A combined bag
Regardless of myriad authorized challenges, Digital Foreign money Group benefited from a rally in Bitcoin costs to shut the yr. A part of this was spurred by certainly one of DCG’s portfolio firms, Grayscale, which won a battle with the SEC in August to transform its longstanding Bitcoin belief into an exchange-traded fund. As of Monday, Grayscale’s ETF has a market cap of round $23 billion, with the agency charging charges of 1.5%.
Digital Foreign money Group was additional boosted by $38 million in income from its mining firm Foundry within the fourth quarter of 2023, though the determine was nonetheless down 22% quarter-over-quarter as a result of decrease mining costs.
The letter additionally cites the November sale of CoinDesk, a number one crypto publication, to the digital property trade Bullish, though it doesn’t specify a deal dimension. CoinDesk spurred the collapse of FTX after publishing the balance sheet of the related buying and selling agency Alameda Analysis, though the following bear market precipitated Digital Foreign money Group to chop off funding to the outlet, which laid off almost 50% of its workers in 2023 earlier than additional restructuring announced final week.
Genesis is one other impediment, with Digital Foreign money Group difficult its portfolio firm’s chapter plan. In a courtroom submitting on Friday, DCG attorneys requested an emergency convention within the Chapter 11 proceedings, disputing a fee plan proposed by the chapter property and writing that the Genesis chapter property’s proposals symbolize a “gross abuse of process and breach of fiduciary duties.”
Whereas Genesis has settled its two lawsuits from the SEC and New York’s lawyer common, Digital Foreign money Group remains to be mired in litigation, with Legal professional Normal Letitia James final week ramping up her fraud prices towards Silbert and his empire to $3 billion.
“This is the same baseless complaint recirculated to generate another round of press headlines,” the shareholder letter learn, including that Genesis’s settlement with the Workplace of the Legal professional Normal was an extra try to bypass chapter regulation.
“We will continue to fight this attempt to undermine the law,” wrote the investor relations group.
