Lumida Wealth: DCG will become an insolvent zombie company

Digital asset giant DCG (Digital Currency Group) fell into a crisis of negative net assets due to its subsidiary Genesis, triggering a legal dispute. Ram Ahluwalia, co-founder of crypto investment advisory firm Lumida Wealth, believes that DCG’s collapse is similar to the Enron scandal in early 2000, and that its legal problems may be more serious than the latter. The New York Attorney General filed a lawsuit accusing DCG and CEO Barry Silbert of financial fraud and other conduct. Ahluwalia noted that DCG could have let Genesis default and file for bankruptcy, but according to charging documents, Barry Silbert personally directed Genesis to refinance the loan to protect parent company DCG. Compared with the Enron scandal, DCG's legal problems are more serious because it involves false balance sheet statements, technical jargon to obscure accounting problems, and Barry Silbert's personal involvement in guiding Genesis' loan refinancing. Although the Enlong scandal caused more damage, DCG's behavior was considered more brazen. Ahluwalia believes that DCG may face numerous settlements and lawsuits and eventually become a bankrupt "zombie company" unable to raise venture capital. Additionally, Grayscale may be put up for auction because the New York Attorney General requires DCG not to act as a securities and commodities business. (BlockWorks)