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CoinLucid > Blog > All News > Genesis Parent Company DCG Shutters Its Wealth Management Division
All News

Genesis Parent Company DCG Shutters Its Wealth Management Division

Ed Miles
Last updated: 2023/01/06 at 10:20 AM
By Ed Miles 4 Min Read
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Digital Currency Group (DCG) has announced it will be closing HQ, its wealth management division, in response to the current market conditions. HQ had been a part of DCG’s portfolio of companies, which includes the crypto broker Genesis and digital asset manager Grayscale. The decision to close HQ comes as a result of the tumultuous environment in the crypto market, which has seen prices fluctuate dramatically in recent months. DCG is confident that this move will help the company focus on its core competencies, and remain financially stable in an uncertain market.

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.

DCG spokesperson

Digital Currency Group’s wholly-owned brokerage subsidiary, Genesis Global Trading, announced a 30% staff reduction to keep afloat on Friday, adding on to the previous 20% layoff in August of last year. This 30% staff reduction will result in Genesis Global Trading having 145 employees. The reduction in staff is intended to keep the subsidiary afloat during the current economic climate.

Reports suggest that Genesis’ HQ had overseen a staggering $3.5 billion worth of assets as of December, making the decision to close of HQ all the more unexpected. The partners of Genesis had reportedly been blindsided by the news and were still coming to terms with the unexpected closure.

In a letter to shareholders dated November, DCG revealed that it had taken out a US$575 million loan and a US$1.1 billion promissory note from Genesis Global Capital, the lending arm of Genesis Global Trading. This is a significant amount of financial obligation, which could have a major impact on the company’s bottom line. DCG has yet to provide further details on the terms of the loan and promissory note, but it is clear that the company is in a precarious financial position. It is important that investors remain informed on the situation as it develops.

In November, Genesis Global Capital suspended both redemptions and new loan originations, causing an uproar among their customers. This unexpected move by Genesis Global Capital has caused a lot of confusion, as customers are unsure of when they can expect their investments to be returned or when they will be able to make new investments. Genesis Global Capital has yet to provide an explanation for their decision, leading to speculation regarding the company’s future. This suspension has caused a great deal of distress to customers, leaving them uncertain of the safety of their investments.

Genesis and its parent firm have been under the spotlight over the past year due to their debt issues stemming from the Three Arrows Capital contagion of 2022. This issue has caused significant financial strain on the company and its subsidiaries, including Grayscale and Foundry, both of which are crypto asset management and mining firms. The Three Arrows Capital contagion has been a major setback for Genesis, and the company is now working to recover from the damage done to its financials. Genesis is taking steps to reduce its debt and address the underlying issues in order to make a full recovery.

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TAGGED: CLOSING, DCG, genesis, GENESIS HQ, GRAYSCALE, WEALTH MANAGEMENT DIVISION
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