- Digital Currency Group (DCG) has taken the decision to shut down its wealth management subsidiary HQ Digital.
- In an email statement, the company’s spokesperson cited the prolonged crypto winter as the reason for this decision.
The crypto winter and economic turmoil have caused another havoc after taking down Three Arrows Capital, FTX, etc. According to reports, the parent company of the publication CoinDesk and crypto broker Genesis, Digital Currency Group (DCG) has taken the decision to shut down its wealth management subsidiary HQ Digital. The subsidiary reportedly has around $3.5 billion in Asset Under Management as of December 2022.
In an email statement, the company’s spokesperson cited the prolonged crypto winter as the reason for this decision.
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. We’re proud of the work that the team has done and look forward to potentially revisiting the project in the future.
It was recently reported that the FTX collapse caused a severe liquidity crisis in Genesis, forcing it to lay off 30 percent of its staff. Genesis also announced it has triggered withdrawal suspension as it seeks to come up with fresh capital for its lending unit. Another company that has been caught up in this drama is Gemini exchange. It is reported that Genesis holds about $1 billion for Gemini, which explains the recent letter from the co-founder Cameron Winklevoss to DCG chief Barry Silbert.
In the letter, Winklevoss disclosed that 34,000 customers of the Gemini Earn products are still waiting in line as they expect the withdrawal to resume. He also labeled a fresh accusation on the DCG chief for orchestrating “bad faith stalling tactics”.
Gemini co-founder’s letter to DCG chief
Winklevoss mentioned that his team has attempted to engage and collaborate with Silbert to reach a consensual resolution to get the repayment of the $900 million owed. They suggest that Silbert “gets everyone in a room” to do this. The letter mentions that Silbert urged them to submit a proposal which was done on December 17.
On Christmas day, the proposal was updated. However, Silbert never gives the green light to “get everyone in a room” to come up with the resolution. According to Winklevoss, Silbert hides behind lawyers, investment bankers, and processes whenever he is asked for a tangible engagement. The letter alleges that DCG owes Genesis $1.675 billion. It further mentions that this is the money Genesis owes to Earn users and other creditors.
You took this money – the money of schoolteachers – to fuel greedy share buybacks, illiquid venture Investments, and Kamikaze Grayscale NAV trades that ballooned the fee – generating AUM of your Trust; all at the expense of creditors and all at your own personal gain.
Silbert, however, objected to this, claiming DCG never borrowed $1.675 billion from Genesis. He also clarified that the functions of Genesis are fully independent, meaning DCG is not responsible for its actions.
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DCG has never missed an interest payment to Genesis and is current on all loans outstanding; next loan maturity is May 2023. DCG delivered to Genesis and your advisors a proposal on December 29th and has not received any response.
It is expected that this could worsen confidence in the crypto market and even prolong the bearish run.
