Digital Currency Group Shuts Trade Block; Windup Begins on May 3

Crypto conglomerate Digital Currency Group (DCG) announced the shutting down of its trading subsidiary Trade Block on May 31. DCG referred to the current scenario of the broader economy and regulatory crackdown in the United States as the main reason. Per the Bloomberg report, Trade Block, led by Breanne Madigan, would begin the winding-up process on May 31, 2023. 

https://twitter.com/crypto/status/1661841445886500877?s=20

DCG Says Good Buy to Trade Block

Trade Block is the unit of DCG operating as a trade execution and prime brokerage service firm. The company was acquired by Coindesk in 2020 and was later allowed to serve as a standalone business. However, the company kept the ‘Index Data’ vertical and rebranded it as CoinDesk Indices. This step proved beneficial for the company. 

Digital Currency Group blamed the harsh crypto winter and the challenging regulatory environment faced by the crypto industry in the U.S. All its subsidiaries face similar challenges. They also had to shut their wealth management division headquarters in January 2023. As per reports, the HQ managed capital for crypto investors and entrepreneurs. They also managed over $3.5 Billion worth of assets. 

Things have not been going well for the conglomerate for some time. Due to heavy exposure to FTX, Genesis halted withdrawals in 2022. Three Arrows Capital reported around $1.1 Billion worth in losses. The cash in hand in 2022 was just $262 Million, and it also missed on payment of $630 Million debt owed to Gemini in April 2023. 

Reports revealed that DCG had to lay off around 500 employees following the FTX saga and recovery. 

However, in Q1 2023, DCG revenue increased by 63% from Q4 2022, mainly due to a recent surge in crypto prices. Bitcoin almost touched the $31,000 mark after surging around 86% YTD. Based on this performance, analysts say that the conglomerate could have higher revenue of $620 Million by the end of 2023

DCG’s troubles with Gemini continue to grow as the company looks at forbearance options. This option would allow the company to halt or reduce payments which shall resume later. Gemini argued that the alternative could be considered based on the conglomerate’s will to engage in good faith and provide a consensual agreement. 

If the Digital Currency Group defaults on payment, its funding will suffer. Experts say there could also be a risk of bankruptcy. If this happens, their investment trust GBTC shall be sold, negatively affecting the market. 

Even though the possibility of DCG filing for bankruptcy is slim, if it happens, the crypto industry will be badly affected. Also, the event could be considered a reiteration of the FTX collapse. Moreover, if a big tree falls, the ground shudders and smaller trees and shrubs become victims. The crypto industry is not ready to face such an event. 

The Digital Currency Group is the powerhouse company of the crypto realm. It owns six subsidiaries, has invested in over 200 startups related to blockchain, and funded over 50 crypto projects. Significant subsidiaries include Grayscale, an investment company; Foundry, a Bitcoin mining firm; Genesis Global Capital and a crypto media outlet Coindesk. 

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.

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