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How Decentraland leaders concluded a capital flow by providing money to Genesis

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The cryptosphere’s seemingly incestuous business ties seem to have grown so prevalent that the market may be desensitized to them.

Decentraland’s relationship with significant investor Digital Currency Group has become more problematic as a result of this week’s disclosures that the company’s founders may have given Genesis Global, a cryptocurrency lender controlled by DCG, loans totaling tens of millions of dollars.

In addition to investing in Decentraland, DCG, which is led by CEO Barry Silbert and owns Genesis, also became one of the largest owners of virtual land in Decentraland. Additionally, Grayscale, a DCG-owned company, solicited funds at the same time for the Decentraland Trust investment vehicle, which allowed investors to passively invest in MANA, the native digital currency of the metaverse platform.

The bottom line: It looks as though a sizeable amount of wealth that began to flow when DCG invested in Decentraland has more or less completed a full circle.
While none of this necessarily amounts to wrongdoing and may simply be a case of business owners looking to make a good return on their investment, Genesis’s bankruptcy documents revealing that Decentraland’s founders had loaned money to DCG’s lending firm come at a time when the crypto community has been rocked by stories of corruption and collusion of interests due to an almost constant stream of news.


Genesis’s bankruptcy reveals the link to Decentraland.

Genesis Global revealed a list of the 50 biggest non-insiders having unsecured claims against company on Thursday after filing for Chapter 11 bankruptcy protection. Companies associated with Decentraland co-founders Esteban Ordano and Ari Meilich as well as CFO Santiago Esponda were among the 50 businesses disclosed.

Esponda’s identity was made public when Heliva International, a Panama-based business owed $55 million by Genesis, cited his Decentraland email account as the contact in court documents. In the Genesis bankruptcy petition, Ordano—who is currently a Decentraland adviser—is named as the contact for a company called Winah Securities, which owes Genesis roughly $27 million.

In Panama, Winah and Heliva are housed on the same level of the same structure.

Last but not least, Meilich, the second co-founder of Decentraland, and his game firm Big Time Studios are owed $20 million by Genesis. Meilich launched Big Time in 2020, although he also continues to serve as a Decentraland advisor.

According to Ordano, Winah and Decentraland have no connection. Meilich opted not to respond. Esponda did not react right away to calls for comment on this article.

The DCG-Decentraland connection further explained

New Year’s Eve celebrations were about to begin when DCG unveiled plans to build “One Time Square” in Decentraland at the end of 2021. The freshly constructed area in the virtual world will host a metaverse party, according to DCG, “including music and entertainment performances, rooftop VIP lounges, CryptoArt galleries, and immersive games.” DCG asserted that it was “one of the major owners of digital real estate” in Decentraland in the same statement.
Decentraland was initially produced by Manu Araoz in 2017. Following that, Araoz and co-founders Ordano and Meilich worked to establish the first town in the virtual world, which they named Genesis City.

Decentraland has been regarded as one of the most prominent platforms in the developing metaverse, along with The Sandbox. Even JPMorgan capitalized on the hoopla by building a nightclub in Decentraland the previous year.

Decentraland was valued at more over $1 billion as of late last year, despite claims of sporadic use and a protracted crypto winter that caused digital asset prices to plunge.


Grayscale’s interests in Decentraland

Since 2018, Silbert has actively promoted Decentraland online. A video tour of the virtual world was taken by Silbert and Genesis CEO Michael Moro in May 2020 and released by CoinDesk.

Then, in February 2021, Grayscale, a DCG affiliate, unveiled its Decentraland Trust. According to Grayscale, the trust was intended to be “solely and passively invested in MANA,” Decentraland’s native coin.

Thus, investors would be able to “get exposure to MANA… in the form of a security while avoiding the issues of buying, holding, and safeguarding MANA directly,” according to Grayscale.

Investors can then purchase property in Decentraland by purchasing MANA.
A snapshot of half a dozen vibrant avatars standing about in a virtual environment with the remark, “Here’s a photo of the DCG team listening to music in Decentraland,” was among the artwork included in the presentation.

Since it hit $5.00 in November 2021, MANA’s price has suffered, along with almost all other digital assets, according to CoinGecko. However, the price of the token has recently increased, more than doubling since the start of this month after trading over $0.70. In a 14-page investor presentation dated March 2021, Grayscale claimed that MANA is a “ERC-20 token that acts as the native digital currency in Decentraland and serves as the unit of account for users to pay for goods and services and land.”