Pro

WHAT H-A-P-P-E-Ns Next: A Path to Crypto’s Recovery

Ryan Selkis, CJ Murphy, Tom DunleavyDec 1, 2022 ⋅ 28 min read

Key Insights

  • A recapitalization of DCG, make-whole of Genesis creditors, and wind down of Genesis Capital may be a “goldilocks” scenario that prevents further crypto contagion.
  • Based on an analysis of public data, an investor syndicate could value DCG at ~$3.2 billion total enterprise value, invest $400 million in preferred equity, refinance $1.7 billion in a senior debt facility, and generate a +3.0x return over a five year period if crypto prices double by 2027. DCG is a levered bet on a crypto market recovery, with debt and equity holders maintaining downside protection in more bearish scenarios.
  • Without a recap of DCG, external Genesis creditors seem unlikely to be made whole, which may trigger bankruptcy proceedings or lawsuits against Genesis and/or DCG.

DCG Recap At-a-Glance

Prologue: Background and Purpose

Let us know what you loved about the report, what may be missing, or share any other feedback by filling out this short form. All responses are subject to our Privacy Policy and Terms of Service.
Get an edge with
Blockworks Intel
Upgrade For $4,500/Yr
Upgrade to unlock 300+ industry leading reports from our researchers, including:
Have questions?Schedule a Demo
Ryan Selkis
twobitidiot

Prior to founding Messari, Ryan was an entrepreneur-in-residence at ConsenSys, and on the founding teams of Digital Currency Group, where he managed the firm’s seed investing activity, and CoinDesk, where he led the company’s restructuring & annual Consensus conferences. He has been an investor & prolific writer in the crypto industry since 2013.

CJ Murphy

Tom Dunleavy
dunleavy89

Tom is a Sr. Research Analyst at Messari. His primary focus is on Layer-1's as well as the relationship between traditional finance and crypto. Prior to joining Messari, Tom worked in Investment Consulting at Meketa and Investment Management at SSGA. Tom studied Finance at Bentley University and earned his CFA and CAIA Charters.

Outline
  • Key Insights
  • DCG Recap At-a-Glance
  • Prologue: Background and Purpose
  • Digital Currency Group
  • Chapter 1: WHAT H-A-P-P-E-N-E-D at Genesis
  • Part 1: The Grayscale Trade
  • Part 2: The GBTC Hot Potato
  • Part 3: The DCG <> Genesis Promissory Note
  • Chapter 2:Three Paths and Seven Stakeholders
  • Chapter 3: Project Phoenix – A Recovery Plan for DCG, Genesis, and Crypto
  • Conclusion
Authors
Ryan Selkis
Prior to founding Messari, Ryan was an entrepreneur-in-residence at ConsenSys, and on the founding teams of Digital Currency Group, where he managed the firm’s seed investing activity, and CoinDesk, where he led the company’s restructuring & annual Consensus conferences. He has been an investor & prolific writer in the crypto industry since 2013.
Tom Dunleavy
Tom is a Sr. Research Analyst at Messari. His primary focus is on Layer-1's as well as the relationship between traditional finance and crypto. Prior to joining Messari, Tom worked in Investment Consulting at Meketa and Investment Management at SSGA. Tom studied Finance at Bentley University and earned his CFA and CAIA Charters.