Hong Kong’s Crypto Regulation Framework: How Hong Kong is Regulating
DCG admits closing of subsidiary headquarters for wealth management
The cryptocurrency giant Digital Currency Group (DCG), which owns the troubled cryptocurrency broker Genesis and the virtual asset manager Grayscale, stated on Thursday that its wealth management business headquarters is closing down.
The announcement coincides with Genesis’ announcement that 30% of its workforce would be laid off as DCG and its affiliates struggle to recover from the ripple effects of the collapse of the cryptocurrency exchange FTX in November.
As per The Information, HQ, that handled funds for cryptocurrency investors as well as entrepreneurs, was in charge of assets valued at about $3.5 billion as of December. Partners in the business were allegedly taken by surprise by the choice.
Although DCG owed its very own company, Genesis, $575 million, CEO Barry Silbert convinced investors that perhaps the firm posed no immediate threat in November as the cryptocurrency sector tried to gauge the magnitude of the seismic damage caused by FTX’s collapse. Because of liquidity concerns, Genesis temporarily halted withdrawals throughout the days after FTX’s insolvency; these withdrawals have not yet been resumed.
The DCG subsidiaries might not be the only ones experiencing liquidity issues. In December, a creditors committee looking into Genesis’ financial concerns hinted that DCG might also be having liquidity problems. The same month, the Dutch crypto exchange Bitvavo claimed that DCG owed the platform about $300 million and was unable to repay it. DCG responded that Genesis had the responsibility for the situation, not DCG.
There seems to be a blurring of the delicate line separating DCG’s stability from the problems of its struggling subsidiaries.
Gemini founders Cameron as well as Tyler Winklevoss on Monday accused DCG and Genesis of adopting “bad-faith stall tactics” to avoid having to pay back their loans in a fiery open letter to Barry Silbert. The letter alleged that DCG owes Gemini a staggering $1.675 billion, significantly more than Silbert had previously disclosed. Gemini users are supposedly due almost $900 million.
In response, Silbert claimed that the number was false and insisted that DCG is in excellent financial standing. That claim might be further questioned in light of what happened on Thursday.