Yesterday, the DCG Group – a conglomerate that manages Genesis, Grayscale, and wealth management service HQ – announced a 30% workforce reduction as the shadow of bankruptcy looms over the battered crypto broker.
DCG has been in trouble for a while now, with partnered services distancing themselves from any possible fallout.
Unfortunately, it seems that problems are piling up at DCG as one division after another begins to fold.
The concerning announcement regarding Genesis’s workforce reduction and possible bankruptcy was soon followed by another one regarding sister company “HQ.”
According to a spokesperson for the company, HQ will be halting all activity as of January 31, although it will consider re-opening the branch in the future.
The shutdown of HQ is blamed on the broader financial situation – and, naturally, on the ongoing crypto winter.
“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, effective January 31, 2023. We’re proud of the work that the team has done and look forward to potentially revisiting the project in the future.”
The first cracks started to show in November when DCG CEO Barry Silbert advised investors that 2022 revenues will be lower than expected. At the time, Genesis – who had already laid off 20% of their workforce in August – owed about $575 million to parent company DCG.
To further compound the terrible financial position Genesis and DCG were in, Bitvavo alone claimed to be owed about $300 million by DCG, who allegedly shunted the blame onto Genesis alone.
As reported by The Information, HQ was still managing about $3.5 billion worth of assets as recently as December, in spite of the crypto winter. As a result, partners and investors were allegedly stunned by the decision, claiming it came completely out of the left field.
Although the DCG group hints at the implosion of 3AC and FTX as culprits for its own woes – claiming that its assets were lost when withdrawals from the two defunct crypto platforms were stopped – the responsibility for liquidity issues should never be passed on to someone else. Had proper due diligence been carried out, the situation at DCG would probably be very different.