Digital Currency Group (DCG) to Close Down Its Prime Brokerage Subsidiary TradeBlock

UTC by staff writer · 3 min read
Digital Currency Group (DCG) to Close Down Its Prime Brokerage Subsidiary TradeBlock
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TradeBlock will officially begin the process of shutting down on May 31.

Digital Currency Group (DCG), a New York-based venture capital firm that invests and provides services to crypto companies is winding down its TradeBlock subsidiary.

According to a May 25 report from Bloomberg, the company, headed by Breanne Madigan, who previously worked at Goldman Sachs for 15 years, will begin the shutdown of the platform by the end of the month, specifically on May 31.

TradeBlock, dedicated to providing trade execution and prime brokerage services to only institutional investors, was purchased by CoinDesk, a crypto news media owned by DCG, through an undisclosed financial transaction in 2020.

Following the acquisition, the media house incorporated TradeBlock’s indexing services into its operations, while other aspects of the firm were transformed into what is known as TradeBlock.

DCG Blames Prolonged Crypto Winter and Regulatory Uncertainties for Closure

Unfortunately, DCG has decided to cease the operations of the institutional trading platform after three years of service due to prevailing economic conditions and the prolonged crypto winter, which significantly impacted the entire industry.

The company also blamed the regulatory environment surrounding the emerging economy in the United States as a significant contributor to the business failure.

“Due to the state of the broader economy and prolonged crypto winter, along with the challenging regulatory environment for digital assets in the US, we made the decision to sunset the institutional trading platform side of the business,” a spokesperson told Bloomberg.

DCG Faces Financial Challenges

DCG and its portfolio of companies have faced a number of financial challenges over the past year. These financial constraints stemmed partly from the collapse of the crypto giant FTX in November, forcing many entities, including BlockFi, into bankruptcy.

The latest closure makes it the second business the firm has shut down in 2023. In January, DCG announced the liquidation of its wealth management firm, HQ Digital, citing challenging economic situations.

The venture capital has reduced a significant portion of its workforce across several units to weather the storm. DCG slashed 13% of its internal headcounts at the start of the year.

One of its subsidiaries, Luno, laid off 35% of employees in January, cutting around 330 jobs, followed by Genesis, its crypto brokerage firm. Genesis suffered a liquidity crisis that led to suspending deposits and withdrawals as well as redemptions and new loan originations from the platform. The move comes after it failed to raise $1 billion from investors to support its business.

In a recent turn of events, DCG failed to meet the $630 million debt payment owed to Genesis. The firm took hundreds of millions in loans from Genesis last year at “prevailing market interest rates”. The funds were supposed to be repaid in May 2023. However, DCG has failed to honor the loan agreement and is actively pursuing discussions to refinance its debt.

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