Personal history and pre-cryptocurrency career
Barry Silbert was born in 1976 and grew up in Maryland. After graduating with a BA in Finance from Emory University in Georgia, he became an investment banker at Houlihan Lokey, where he worked on high-profile bankruptcy cases, including Enron and Worldcom.
In 2003, Silbert founded Restricted Stock Partners, a trading platform for restricted securities issued by companies engaging in private deals. In 2008, the company changed its name to SecondMarket.
Silbert gained several accolades in recognition of his entrepreneurial success during this time. In 2009, he was awarded EY Young Entrepreneur of the Year and was invited to join the Council on Technology and Innovation by the then-mayor of New York, Michael Bloomberg. In 2011, he was named as one of Fortune’s “40 under 40.”
SecondMarket was eventually bought by NASDAQ in 2015, by which time Silbert was already firmly engaged with the cryptocurrency sector.
Building a crypto empire
Barry Silbert first bought Bitcoin in 2012, investing $175,000 when the price was still only around $11 per BTC. When Silbert sold SecondMarket to NASDAQ in 2015, he relaunched the cryptocurrency trading arm of the business as Genesis, which went on to become one of the world’s largest crypto trading firms at its peak.
Silbert also launched Digital Currency Group (DCG) in 2015, raising investment from firms including Bain Capital and Mastercard, among others. DCG channelled the funding into a portfolio of more than 200 companies across 35 countries, including news outlet Coindesk, analytics firm Chainalysis, USDC issuer Circle, and wallet maker Ledger. Coindesk has since been sold to institutional digital asset exchange, Bullish.
Genesis collapse
Following the collapse of Terra’s LUNA in May 2022, several firms became caught up in the trail of debt left behind, one of which was Genesis, owned by DCG. Three Arrows Capital, a hedge fund that folded following the LUNA crash, was one of the largest borrowers of Genesis and could not repay its debts. However, Genesis continued trading until November, when another of its largest customers, FTX, also collapsed. Following the FTX failure, Genesis halted withdrawals, and by January 2023, the firm had filed for bankruptcy in the US.
Gemini controversy
At the time it began to collapse, Genesis was partnered with cryptocurrency exchange Gemini, owned by the Winklevoss brothers, to offer the latter’s Earn program. In light of the financial troubles, relations between the parties involved broke down.
A week before Genesis had applied for bankruptcy, the SEC charged both Genesis and Gemini with offering unregistered securities through the Gemini Earn program, alleging that the firms had bypassed investor disclosure requirements.
In the weeks leading up to the SEC’s action, relations between Silbert and Cameron Winklevoss had become visibly strained, with the two engaging in heated exchanges on social media. The argument culminated in Winklevoss accusing Silbert of fraud, a claim which Silbert strongly refuted.
Winklevoss’ claim hinged on allegations that he clarified in an open letter to Silbert via social media in July 2023. He alleged DCG had attempted to cover up a $1.2 billion loss following the collapse of Three Arrows Capital by giving the appearance of the parent company having absorbed the loss. Instead, DCG had provided Genesis a promissory note for the amount of $1.2 billion, which had only become public knowledge after FTX had also crashed.
In September 2023, it was reported that prosecutors from the FBI and SEC had interviewed Winklevoss in connection with his allegations and the ongoing investigation by the SEC. In October 2023, the New York Attorney General announced it was suing DCG, Genesis, and Gemini for defrauding investors of $1 billion.
For its part, DCG has confirmed that it intends to address its obligations to Genesis by delivering on the promissory note when it becomes due in 2032. However, in November 2023, court filings indicated that a settlement between the two firms was already underway.
Grayscale Investments and Bitcoin ETF
In August 2023, Grayscale Investments achieved a key legal milestone in its years-long bid to launch a Bitcoin ETF. The ruling in a US appeals court was widely lauded as one of the most significant steps forward in the industry’s attempts to establish an ETF and injected fresh confidence into the crypto markets, which had stagnated for several months prior.
Notably, the discount at which Grayscale’s Bitcoin Trust (GBTC) was trading reduced to two-year lows in late October 2023 in anticipation of a listing.
Barry Silbert essentials
- Barry Silbert is an entrepreneur, investor, and founder of multiple businesses, including Grayscale Investments and Digital Currency Group.
- Silbert’s background in investment banking and entrepreneurial success in traditional finance meant he was already an influential figure when he entered the crypto space in 2015.
- Silbert’s firm Genesis has been financially insolvent since the collapse of 2022; however, Grayscale Investments seems poised to make history as the issuer of the first spot Bitcoin ETF.