A sale of the CoinDesk digital currency media outlet could lead to less prejudiced coverage of Bitcoin SV (BSV) once Barry Silbert’s Digital Currency Group (DCG) is out of the picture.
The ongoing financial challenges facing DCG, which halted its quarterly payouts to shareholders this week, resulted in a bankruptcy filing by its digital asset lending subsidiary Genesis Global Capital. DCG told shareholders its current focus was on “strengthening our balance sheet by reducing operating expenses and preserving liquidity.”
While DCG shareholders were bracing for impact, the Wall Street Journal reported Wednesday that DCG’s wholly-owned CoinDesk subsidiary was exploring a possible sale. CoinDesk CEO Kevin Worth said the company had received “numerous inbound indications of interest,” and Lazard advisors were helping “explore various options to attract growth capital … which may include a partial or full sale.”
Silbert has been a CoinDesk investor since 2013, but DCG acquired CoinDesk outright in late 2015 for between $500,000-$600,000. The WSJ reported that some of the offers for CoinDesk are “north of $200 million.” CoinDesk generated revenue of around $50 million last year from a combination of advertising, its index business, and live events, including the annual Consensus conference.
A $200 million sale would make CoinDesk one of DCG’s more savvier acquisitions. However, with DCG’s liabilities currently measured in the billions, selling CoinDesk won’t plug the holes in Silbert’s leaky ship. And CoinDesk coming under different ownership might mean less favorable coverage for the surviving elements of DCG’s portfolio, which includes stakes in digital asset exchanges, developers, DeFi protocols, stablecoins, etc.
The staggering rise in CoinDesk’s perceived value is at least partly due to its report last November on a leaked balance sheet of Alameda Research, the market-maker affiliated with the FTX exchange. Both companies were owned by Sam Bankman-Fried (SBF), and the leak exposed the financial chicanery that SBF had employed to disguise just how bad he was at running a business.
That scoop contributed to the downfall of SBF’s empire and significantly elevated CoinDesk’s profile outside the sector’s traditional confines. But it also poured gasoline on the smoldering dumpster fire that was already engulfing the ‘crypto’ sector and damaged DCG’s other investments, including Genesis, which had $175 million stranded on FTX when it imploded.
CoinDesk takes pains to declare its independence from Silbert whenever it covers a DCG-related story, a theme that Silbert himself used to echo, although that hasn’t always worked out in practice.
Separation of church and stake
In 2016, shortly after DCG acquired CoinDesk, DCG’s director of growth Ryan Selkis commented on the relocation of CoinDesk’s headquarters to DCG’s home base of New York City. Selkis stressed that CoinDesk would be based in “a different part of town than DCG’s headquarters, so we’re creating real physical barriers in addition to the informational barriers that have been implemented.”
But a few years later, Silbert directed CoinDesk staff to relocate to DCG’s Manhattan HQ, where DCG’s Genesis and Grayscale subsidiaries were already ensconced. In an email to CoinDesk staff, Silbert promised to retain the hands-off approach to editorial content and instructed staff to ignore “conspiracy theories and perceptions” that Silbert was looking for favorable treatment of DCG and its investments.
Every CoinDesk article is accompanied by a footnote disclosure that “certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights [SARs], which vest over a multi-year period,” as part of their compensation.
CoinDesk’s chief content officer Michael Casey told The Verge that SARs were introduced in 2022 as a staff retention strategy. The valuation of these SARs likely took a hit following CoinDesk’s Alameda bombshell and could take an even greater hit should DCG face a financial reckoning. Assuming, that is, CoinDesk remains under the DCG umbrella for much longer.
The Verge article closes with this interesting exchange: “I asked Casey what stories he wished CoinDesk had about DCG. He paused for a second. “That’s a little too close to the bone,” he told me.”
All in the family
DCG’s purported hands-off approach to CoinDesk’s content was sorely tested during the late 2021 civil trial pitting Bitcoin inventor Dr. Craig Wright against Ira Kleiman, the brother of Wright’s late friend and colleague Dave Kleiman. Ira filed the suit based on his misguided belief that Dave’s estate was entitled to a share of the BTC tokens that Ira believed Dave and Wright mined together prior to Dave’s death in 2013.
The entire trial was predicated on the fact that Wright is the individual behind the Satoshi Nakamoto pseudonym credited with authoring the 2008 Bitcoin white paper. Without that understanding, Ira would have no cause to bring a claim against Wright. But not everyone, particularly those with a financial stake in promoting an alternate version of Bitcoin’s history, was willing to admit that reality publicly.
DCG’s entire portfolio is dedicated to propping up the universe of shitcoins and neutered protocols (such as BTC) that proliferated after the Bitcoin Core developers hijacked the original Bitcoin protocol. Wright’s efforts to preserve the original protocol in the form of BSV blockchain threatened this universe, and so his Satoshi claims needed to be quashed.
CoinDesk has predominantly acted as a loyal foot soldier in the DCG campaign, although some cracks in this alliance do occasionally appear. On November 1, CoinDesk tweeted a link to its latest Kleiman v Wright article that originally included the subhead ‘At stake: The ownership of Satoshi Nakamoto’s 1.1 million BTC’.
This prompted Alan Silbert—Barry’s brother—to publicly lambaste CoinDesk, saying, “This article should have never seen the light of day. C’mon gang. Headline alone is absolutely awful.” The subhead was duly changed to ‘At the center of the case: the potential ownership of 1.1 million BTC.’
Alan caught the crypto bug when Barry alerted him to its existence in 2013. That same year, Alan launched BitPremier, a ‘luxury marketplace’ for crypto high-rollers, thanks to seed funding from—who else—DCG. BitPremier didn’t last long, but Alan clearly hasn’t forgotten the debt he owes brother Barry.
COPAthetic
Alan wasn’t new at trying to publicly sabotage Wright and BSV. In April 2019, when a group of exchanges colluded to delist BSV to limit its adoption, Alan enthusiastically voiced his support. The anti-competitive delistings—which are the subject of a £9.9 billion class action suit in the U.K.—were led by Changpeng ‘CZ’ Zhao, the inveterate shyster behind the regulatory-phobic Binance exchange.
While Binance had no time for Wright and BSV, it proved far more willing to listen to the suggestions of others, including those named Silbert. In May 2021, the exchange solicited public opinion on what token it should list next and Barry was quick to respond with LPT, the token of the Livepeer video streaming platform. That same month, Binance announced it would list LPT.
By sheer coincidence, it wasn’t long before DCG revealed that it had led a $20 million fundraising round for Livepeer. Others participating in the round included Coinbase Ventures, the VC arm of the Coinbase exchange, which listed LPT the year before.
DCG has a stake in Coinbase (NASDAQ: COIN), as well as Bitpay, Blockstream, Kraken, and Protocol Labs, all of which are members of the Crypto Open Patent Alliance (COPA). COPA was established for the sole purpose of thwarting Wright’s growing patent portfolio, which, if left unchallenged, stands to undo so much of the work that COPA members have done to ensure their own crypto nests remain so luxuriously feathered.
Et tu, Crypte?
CoinDesk published an opinion piece Thursday that sought to expose a group of YouTubers who were paid by the Creators Agency—an influencer-focused ‘talent management company’—to promote FTX to retail customers. CoinDesk’s op-ed accused these YouTubers of having taken “money that was likely stolen from FTX customers to promote a Ponzi scheme to their audience.”
We’re still waiting on the op-ed slamming Silbert for (a) investing $250,000 in FTX way back when, and (b) pressuring Alameda into repaying a $2.5 billion loan to Genesis last summer. We now know that FTX/Alameda was effectively insolvent by the time that loan was repaid. In other words, that $2.5 billion was FTX customer cash, and yet Silbert— much like those dastardly YouTube influencers—has shown no sign that he intends to return it to those from whom it was stolen.
And hey, talk about promoting scams, remember that in April 2021, Silbert had the stones to publicly laud Binance’s CZ and SBF as “the vanderbilt and carnegie of this century.” Thing is, Cornelius Vanderbilt and Andrew Carnegie built companies that built things that people could actually use, not promote Ponzi schemes that preyed on a credulous public. The jury’s still out on whether Silbert was a willing participant in these schemes or just another naïve dupe.
Silbert was profiled this week in the Wall Street Journal, which quoted former colleagues describing his aversion to publicity. Silbert once cautioned subordinates that “you don’t want to be a target” by flaunting your crypto wealth. With DCG teetering on the brink of bankruptcy, Silbert may not have to worry about flaunting anything for much longer.
A new media sheriff
Regardless of how vigorously CoinDesk asserts its editorial independence from DCG, the site’s coverage has helped raise the profile of countless dodgy protocols and thus contributed to the crypto casino model that the likes of DCG rely on to fleece their retail flock.
CoinDesk has also shown itself willing to obliquely assist DCG’s goals by amplifying false claims by developer Greg Maxwell regarding BSV-related technology. Maxwell, a former Blockstream CTO, has a vested interest in quashing BSV and promoting Blockstream’s ‘Layer 2’ solutions to BTC’s shortcomings. Shortcomings Maxwell helped create in order to ensure Blockstream’s success. Shortcomings that BSV lacks.
It remains to be seen who among CoinDesk’s deep-pocketed suitors might emerge victorious in the quest to be its new owner. That individual/entity might be of unimpeachable character or could be yet another rapacious scammer looking to utilize CoinDesk’s reach to perpetrate even greater scams. We’ll hope for the former, but we’ll be prepared for the latter. It is, after all, what we’ve come to expect.
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Ethereum, FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.
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