In an uncertain economic context and in the face of an unpredictable regulatory climate in the United States for cryptocurrencies, Digital Currency Group (DCG) announced last Thursday the cessation of its main brokerage operations through its subsidiary TradeBlock. According to information reported by Bloomberg, the institutional trading platform will officially cease operations on May 31.
Founded in 2011, TradeBlock was acquired by DCG’s specialized cryptocurrency media platform, CoinDesk, in 2021. CoinDesk maintained only the company’s index data business, which it later renamed CoinDesk Indices.
DCG is going through a difficult period. Indeed, Genesis Global Trading, one of its subsidiaries, halted customer withdrawals last November before going bankrupt, leaving an estimated $3 billion in debt to its creditors.
Additionally, the company is facing additional pressure over a loan product called “Earn,” offered in partnership with cryptocurrency exchange Gemini.
It was reported earlier this week that DCG failed to honor payment on a $900 million loan from Gemini to Genesis.
The cryptocurrency exchange warned earlier in the month that if DCG could not make the necessary loan repayment or restructure its debt, the company would be in danger of defaulting on its bonds.
DCG’s financial situation was further complicated with the revelation in its Q4 2022 Investor Report that it suffered losses of $1.1 billion following the collapse of Three Arrows Capital. DCG would be the main creditor of 3AC, which owes it approximately $2.36 billion.
Last January, following the collapse of FTX and the bankruptcy of 3AC which led to a prolonged decline in crypto currency markets, the “crypto winter”, DCG decided to close its wealth management division, HQ. The group also considered selling its CoinDesk media division the same month. Earlier this month, DCG missed a $630 million debt payment to Genesis Global.
Genesis Global is currently the subject of a lawsuit, accused by the United States Securities and Exchange Commission of trading in unregistered securities through its Earn program.
Faced with these multiple challenges, the decision to close TradeBlock marks a further step in DCG’s attempt to reposition itself in this complex economic and regulatory environment. This is a situation that speaks to the challenges faced by businesses operating in the cryptocurrency industry.
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