The announcement comes on the same day that Genesis, a crypto broker and another DCG subsidiary, made a significant number of layoffs.
The cryptocurrency conglomerate Digital Currency Group (DCG), which is also responsible for the troubled cryptocurrency broker Genesis and the digital asset manager Grayscale, confirmed on Thursday that it will be closing its wealth management division.
According to a DCG spokesperson who spoke with news platform – Decrypt, “Due to the state of the broader economic environment and prolonged crypto winter presenting significant headwinds to the industry, we made the decision to wind down HQ, effective January 31, 2023.” We are pleased with the team’s performance and anticipate revisiting the project in the future.
Genesis announced a massive wave of layoffs on the same day, affecting 30% of its workforce. DCG and its subsidiaries are still recovering from the spread of the contagion caused by the implosion of crypto exchange FTX in November.
According to The Information, as of December, HQ, which managed capital for crypto investors and entrepreneurs, was in charge of assets worth approximately $3.5 billion. The decision reportedly surprised the partners of the company.
DCG CEO Barry Silbert reassured investors that the company faced no imminent threat, despite the fact that it owed $575 million to its own subsidiary, Genesis, in November, as the crypto industry attempted to assess the extent of the seismic damage caused by FTX’s collapse. Due to liquidity issues, Genesis has not resumed withdrawals in the days following FTX’s bankruptcy.
DCG’s subsidiaries may not be the only ones experiencing liquidity crunches. In December, a creditor committee that was looking into Genesis’ financial woes said that DCG might be having problems with its own liquidity. In the same month, Dutch cryptocurrency exchange Bitvavo claimed that DCG owed it almost $300 million, which it appeared incapable of repaying. DCG responded that Genesis was responsible for the situation, not DCG.
It appears that the line that separates DCG’s stability from the problems of its troubled subsidiaries is blurring.
Gemini’s founders, Cameron and Tyler Winklevoss, accused DCG and Genesis of using “bad-faith stall tactics” to avoid paying their debts in an explosive open letter to Barry Silbert on Monday. The letter claimed that DCG owes Gemini a whopping $1.675 billion, significantly more than Silbert had previously disclosed. Gemini users are said to be owed approximately $900 million.
In response, Silbert asserted that the figure was incorrect and that DCG is in excellent financial condition.
The events of Thursday may call that assertion even more into question.
DCG owns the crypto news site CoinDesk, the bitcoin mining advisory firm Foundry, the crypto exchange Luno, and the end-to-end crypto trading platform TradeBlock in addition to HQ, Genesis, and Grayscale.