Digital Currency Group will close its wealth-management division

What’s new? Cryptocurrency conglomerate Digital Currency Group (DCG) Barry Silbert intends to close a wealth-management division called HQ. This is due to the state of the economic environment and the prolonged crypto winter, which is creating significant challenges for the industry, the company said in a statement. HQ will close on January 31, The Information reports. The unit had more than $3б5 billion in assets under management.

The Information’s material

What is going on with DCG? On November 16, the credit division of DCG’s crypto brokerage Genesis Global Trading suspended customer withdrawals following the collapse of the FTX trading platform. After that, Gemini crypto exchange suspended its Earn program, whose credit partner is Genesis Global Capital. Bloomberg later reported that Genesis was having trouble raising cash for its lending arm. The firm warned potential investors that it might have to file for bankruptcy if it fails. In late November, it became known that Genesis creditors were looking for ways to prevent the platform from going bankrupt. To do so, they teamed up with lawyers.

On November 22, Genesis hired specialists to conduct a restructuring. And Grayscale Investments refused to provide evidence of reserves, citing “security concerns.” An independent researcher later confirmed 633 000 BTC from Grayscale based on blockchain data.

In early December, CoinDesk learned about Genesis’ $1,8 billion debt to creditors. The Financial Times reported that Genesis’ lending arm owed $900 million to customers using the crypto exchange Gemini’s Earn program. Later, hedge fund Fir Tree Capital Management sued digital asset management firm Grayscale Investments for details about GBTC and to investigate potential conflicts of interest and management errors. Later, Grayscale allowed the sale of up to 20% of GBTC shares.

Broker Bernstein suggested that Grayscale Bitcoin Trust be disbanded to address DCG’s concerns. A total of three ways out of the current situation were suggested by analysts. In the same month, cryptocurrency exchange Bitvavo announced problems with DCG’s liquidity and its inability to withdraw its funds from the company’s services. And Cameron Winklevoss, co-founder of crypto exchange Gemini, published an open letter to Silbert in which he recalled DCG’s $900 million debt to his platform.

For what Genesis’ liquidity crisis threatens the crypto market, read GetBlock Magazine’s article.