Barry Silbert, the boy that spent his bar mitzvah money to trade baseball cards, now has no money.
Forbes, which specializes in estimating net worth, says that Silbert is now worth zero, down from $3 billion.
The Digital Currency Group (DCG), which Silbert founded in 2015, has $2 billion in debt, Silbert said in a letter to investors.
“DCG currently has a liability to Genesis Global Capital of ~$575 million, which is due in May 2023,” he said, adding:
“You may also recall there is a $1.1B promissory note that is due in June 2032 [because] DCG stepped in and assumed certain liabilities from Genesis related to the Three Arrows Capital default…
Aside from the Genesis Global Capital intercompany loans due in May 2023 and the long-term promissory note, DCG’s only debt is a $350M credit facility from a small group of lenders led by Eldridge.”
Silbert also revealed that their revenue is $800 million for 2022. He does not state their expected profits or losses.
Silbert owns about 40% of DCG, a company that has invested in countless of entities, including Coinbase, FTX, Coindesk, Blockstream and overall 200 mainly crypto companies.
However “Forbes estimates the value of DCG’s outstanding liabilities are greater than the fair market value of its assets in the current market environment; DCG may also struggle to offload illiquid bets. For these reasons, Forbes estimates the current value of Silbert’s 40% stake in DCG to be approximately $0.”
This does not include personal investments. Silbert bought $175,000 worth of bitcoin at the average price of $11 in 2012.
“I started buying bitcoin, you know, at probably around seven bucks and my average price of bitcoin was $11. So when it went from 11 to 13, I thought I was a genius. When it fell to 8, I thought I was not,” he is quoted as stating in 2017. “But so far, so good.”
That’s about 16,000 bitcoin worth $250 million, or circa just 10% of the debt DCG owes.
Silbert also said he contributed most of his bitcoin holdings to DCG, which still holds “a significant amount” of his original digital coins.
Prior to launching the Bitcoin Trust in September 2013, Silbert was running SecondMarket where private company employees could sell their shares.
He sold SecondMarket to Nasdaq in 2015 for an undisclosed price, but speculation at the time was that he sold it for $10 million, so peanuts in the current context.
DCG owns Coindesk, rather than just having some shares. They bought it in 2016 for apparently just half a million.
Coindesk is thought to be losing money, with their yearly conference just about subsidizing their main operations.
That is all to say Silbert may really be worth nothing, considering the debts, although he did buy ETC at 50 cent in 2016.
Presuming however he did with ETC same as with bitcoin, using them to bootstrap the Ethereum Classic Trust, they would be worth just about $100 million even if no one else invested in this trust.
This dire financial situation, with some suggesting Grayscale has been losing money since February 2021 when the premium turned into a discount even if they still have revenue, may explain why it has taken so long to sort out the situation at Genesis, a DCG subsidiary that paused withdrawals in November.
The Wall Street Journal reports Genesis is to lay off another 30% of their workforce, “and is considering filing for bankruptcy, according to people familiar with the matter.”
The founder of Gemini, Cameron Winklevoss and an apparent Creditors Committee, has given DCG a deadline of 8th of January to repay $900 million owed by Genesis to Gemini Earn.
That’s by this Monday. Genesis has been trying to raise $1 billion from Binance and Apollo Global Management, but that hasn’t gone through so far.
A bankruptcy may well mean the liquidation of the Grayscale Trusts, although Silbert has tried to firewall DCG and to contain any Genesis fallout.
It is estimated the Trusts have 800,000 investors, making it fairly distributed. Most may well hold considering most cryptos are down 80% or more, and if they become part of a bankruptcy it may take years in any event.
That wouldn’t be too much different for current Trust share holders as they can’t redeem for bitcoin or eth. Their only hope is if Grayscale wins in the lawsuit against SEC to turn this widow Trust into an ETF, but the outcome of that case is uncertain and is not expected anytime soon.
For crypto market access, there are now countless of spot crypto ETFs in Canada and Europe, so it shouldn’t make too much difference.
But a DCG bankruptcy would change the crypto space and especially the bitcoin one as Blockstream would have less of a grip over the bitcoin protocol and Coindesk would have less influence.
Whether matters progress that way however remains to be seen… in just a few days now.
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- Source: https://www.trustnodes.com/2023/01/05/barry-silbert-is-now-broke
