Digital Currency Group (DCG) has announced that it closing down its newest subsidiary firm, HQ Digital. HQ Digital is the wealth management platform for digital assets investors.
The news was first reported by The Information according to a shared memo issued to customers. A Spokesperson to DCG highlighted that the closure of HQ Digital resulted from issues relating to the prolonged crypto winter and the dwindling financial crypto economy.
DCG is the parent company of Genesis, Grayscale, Foundry, and Coindesk and was founded by CEO Barry Silbert in 2015. The news comes shortly after DCG and Genesis were accused by Gemini Earn customers of concealing its status of insolvency from investors. As a result, a class action was filed against both companies.
Troubled crypto platform Genesis, also announced on Thursday that it was cutting down on the numbers of its staff in an effort to slash costs at the struggling institutional crypto business.
Genesis experienced financial troubles due to its exposure to the defunct FTX platform. The firm then stated that it was stopping customers’ withdrawals which sparked rumors of bankruptcy in the online community.
Pressures on Digital Currency Group
The Digital Currency Group is a venture capital firm that invests in Bitcoin and blockchain-related businesses. The firm has invested in over 150 companies in the bitcoin and blockchain space including Coinbase, BitGo, and Circle. But despite its achievement, DCG is currently facing pressures relating to its subsidiary firm, Genesis.
Cameron Winklevoss, Co-Founder of the Gemini crypto exchange wrote an open letter to Barry Silbert, requesting a resolution of Gemini’s users’ funds that are stuck in the Gemini Earn program.
Earn Update: An Open Letter to @BarrySilbert pic.twitter.com/kouAviTho4
— Cameron Winklevoss (@cameron) January 2, 2023
Winklevoss, in the letter, told the CEO of DCG to resolve the challenges in Genesis by January 8th as the firm has suffered long enough and its customers are anxious to get back their funds from Gemini.
Gemini had earlier established a Creditors’ Committee to recover its debt from Genesis but that seemed not to have yielded results because Gemini users are yet to be paid.
Genesis had announced that it was putting a halt to customer withdrawals after being alleged of owing its investors a debt of $1.8 billion. Meanwhile, DCG was reported to have borrowed $900 million from Genesis, which severely impacted the Gemini loan program, Gemini Earn.
Silbert, however, told investors that the loan was made after DCG assumed Genesis’ risk from the Three Arrows Capital failure.
