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It seems that incestuous business relationships across the cryptosphere seem to have become commonplace, the market may be numb.
In the case of Decentraland, its relationship with major investor Digital Currency Group was further complicated this week following the disclosure that Decentraland’s leaders appeared to be lending tens of millions of dollars to cryptocurrency lender Genesis Global, which is owned by DCG.
DCG, which is run by CEO Barry Silbert and owns Genesis, not only invests in Decentraland, but is also one of Decentraland’s largest virtual landowners. Additionally, Grayscale, which is also owned by DCG, is simultaneously raising capital for an investment vehicle known as the Decentraland Trust, which allows investors to invest passively in the metaverse platform’s native digital currency, MANA.
Bottom line: The large amount of capital that started flowing when DCG invested in Decentraland appears to be more or less in full swing.
While none of this amounts to a digression, and probably boils down to a simple case of entrepreneurs seeking solid returns on their money, Genesis’ bankruptcy documents announcing that Decentraland’s founders have lent money to lending firm DCG comes at a time when the crypto world has been, with an almost seamless barrage of news. stagnate, rocked by tales of corruption and mingling of interests.
Genesis’ bankruptcy exposed Decentraland’s connections
Genesis Global filed for Chapter 11 bankruptcy protection on Qhursday and thus released the list of the 50 largest non-insiders with unsecured claims against them. Among the 50 entities listed are companies connected to Decentraland founders Esteban Ordano and Ari Meilich, as well as CFO Santiago Esponda.
Esponda’s name came about because his Decentraland email address was listed in a court filing as a contact for Heliva International, a Panama-based company owed $55 million by Genesis. Ordano, who currently acts as an adviser to Decentraland, is listed in Genesis’ bankruptcy filings as a liaison for an entity called Winah Securities, which Genesis owes about $27 million.
Winah and Heliva are located on the same floor of the same building in Panama.
Finally, Genesis owes $20 million to Big Time Studios, a games company run by Meilich’s second Co-Founder of Decentraland. While Meilich started Big Time in 2020, he also remains an advisor to Decentraland.
Ordano told The Block that Winah has no ties to Decentraland. Meilich declined to comment. Esponda did not immediately respond to a request for comment regarding this story.
The DCG-Decentraland connection is further explained
At the end of 2021, with New Year’s Eve celebrations fast approaching, DCG announced plans to create “One Time Square” in Decentraland. DCG said it plans to host metaverse parties in the newly created space located in a virtual world “featuring live music and entertainment, a rooftop VIP lounge, CryptoArt gallery, and immersive gaming.” In the same statement, DCG also claims to be “one of the largest digital real estate owners” within Decentraland.
Manu Araoz first created Decentraland in 2017. After that, Araoz and co-founders Ordano and Meilich, helped found the world’s first virtual settlement, which they named Genesis City.
Along with The Sandbox, Decentraland has been considered one of the most high-profile platforms in the evolving metaverse. JPMorgan even jumped on the hype wave, opening a lounge in Decentraland last year.
Despite reports of sluggish usage and a prolonged crypto winter that has seen digital asset prices slump, at the end of last year, Decentraland was valued at over $1 billion.
Grayscale interests in Decentraland
Silbert has been openly promoting Decentraland online since 2018. In May 2020, Silbert and Genesis CEO Michael Moro conducted a filmed cyber tour, which was published by CoinDesk.
Then in February 2021, DCG subsidiary Grayscale launched what it calls the Decentraland Trust. The goal is for the trust to “invest exclusively and passively in MANA,” Decentraland’s native token, Grayscale said.
Doing so, Grayscale says will enable investors “to gain exposure to MANA … in the form of security while avoiding the challenges of buying, holding, and securing MANA directly.”
Purchasing MANA is how investors can then buy properties in Decentraland.
MANA is “an ERC-20 token that serves as the native digital currency in Decentraland and serves as a unit of account for users to pay for goods and services and LAND,” Grayscale stated in a 14-page investor presentation dated March 2021.
Screenshots from the Grayscale presentation are labeled as “image of the DCG team listening to music in Decentraland”.
The presentation also included some artwork including a screenshot showing half a dozen colorful avatars standing in a virtual world with the caption: “This is a picture of the DCG team listening to music in Decentraland.”
Along with almost all digital assets, the price of MANA has taken a beating since topping $5.00 in November 2021, according to CoinGecko. But the token price has been recovering lately, more than doubling since earlier this month after trading above $0.70.
© 2023 Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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