After DCG subsidiary Genesis Global Capital halted withdrawals from its platform in November 2022, the second biggest blow hit the US-based venture capital company. On Thursday, DCG announced that the firm is shutting down its wealth management unit HQ.
As per reports, the firm had more than $3.5 billion worth of assets under its management.
“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. We are proud of the work that the team has done and look forward to potentially revisiting the project in the future,” the firm said in a statement.
Meanwhile, this week DCG is facing continuous challenges. Recently, the DCG CEO faced criticism from the Gemini founder. Cameron Winklevoss, the co-founder of Gemini, accused Barry Silbert, CEO of Digital Currency Group (DCG), of intermingling users’ funds.
On Jan 2nd, Winklevoss wrote an open letter to Silbert that Genesis Global Capital and DCG for owing Gemini’s users funds worth $900 million.
Within an hour, Sibert responded to Winklevoss’s open letter stating “DCG did not borrow $1.675 billion from Genesis.” He tweeted, “DCG has never missed an interest payment to Genesis and is currently on all outstanding loans; next loan maturity is May 2023.”
Impact of FTX downfall on DCG
Recently, Barry Silbert stated that the recent downfall of FTX hurt the company’s growth. After FTX’s collapse, DCG lost $175 million (USD). Barry Silbert stated that DCG joined a growing list of industry leaders trying to settle users’ assets after the downfall of the FTX market price.
On Nov 16, 2022, DCG subsidiary Genesis Global Capital stopped all bitcoin withdrawals and loan applications for their users. Genesis is a crypto trading and lending platform mainly focusing on institutional clients and high-net-worth individuals. As per the reports on Nov 17, 2022, DCG received a document stating that Genesis was undergoing an “ongoing run on deposits.”
FTX downfall and crypto winter is affecting the crypto community’s growth
The FTX collapse and crypto winter slowed the 2022 crypto market recovery. In mid-2022 the crypto community was trying to recover from losses due to the crypto winter when the downfall of FTX exacerbated the bearish spell, resulting in the crypto market nearly losing $330 billion at the end of 2022.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/01/08/dcg-wind-down-wealth-management-unit-hq/