Digital Currency Group (DCG), a cryptocurrency venture capital conglomerate, has reported losses of more than $1 billion in 2022. The losses were mainly due to the collapse of Three Arrows Capital (3AC), a cryptocurrency hedge fund. in which DCG had invested, and a drop in cryptocurrency prices.

According to DCG’s fourth quarter 2022 investor report, the losses were primarily due to the impact of the 3AC default on Genesis, DCG’s lending arm. Genesis filed for Chapter 11 bankruptcy in late January as it was 3AC’s largest creditor, having loaned the now-bankrupt hedge fund $2.36 billion. 3AC filed for bankruptcy in July 2022.

DCG’s fourth-quarter loss came in at $24 million, while revenue came in at $143 million. Full-year revenue for DCG came in at $719 million, with total assets of $5.3 billion. DCG’s cash and liquid holdings totaled $262 million, and its investments, such as shares in its grayscale trusts, totaled $670 million. The remaining assets were held by divisions of its asset management subsidiary Grayscale and DCG’s Bitcoin (BTC) mining business, Foundry Digital.

The valuation of DCG’s stock was $2.2 billion, with a per-share price of $27.93, which the report said was “generally consistent with the industry’s 75% to 85% decline in stock values.” shares during the same period”. However, the company said it “reached a milestone” with the restructuring of Genesis.

In February, DCG proposed a deal that would see its equity stake in the Genesis business entity contributed and all Genesis entities under the same holding company, with its business entity sold. DCG would also exchange an existing $1.1 billion note due 2032 for convertible preferred stock, and its existing 2023 term loans with an added value of $526 million would be refinanced and payable to creditors.

According to a Genesis creditor, the plan “has a recovery rate of about $0.80 per dollar deposited, with a $1.00 pathway” for those the company owes money on.

DCG stated on November 1, 2021, that its valuation was in excess of $10 billion, following the sale of $700 million worth of shares to companies including Alphabet Inc., the parent company of Google. However, recent losses have significantly lowered its valuation.

The collapse of 3AC and the subsequent bankruptcy filing of Genesis has had a major impact on DCG’s finances. The company will need to continue to navigate the volatile cryptocurrency market and work to resolve its outstanding liabilities to regain investor confidence.