Genesis parent company DCG stops crypto management service

The problems with FTX are unfortunately felt throughout the crypto industry, even before Digital Currency Group (DCG). This gigantic company has announced that it will stop asset management.

DCG stops asset management by FTX

That DCG is the parent company of many major crypto companies, including Genesis, Grayscale, and also CoinDesk itself. Genesis got into trouble because of FTX, as it had a lot of exposure to FTX. As an institution, you could lend your tokens to Genesis for staking, after which you would receive a modest return on top of the value of your crypto.

But when lenders withdrew, the financial problems threatened to worsen. Many companies could no longer request their tokens back, including the crypto exchanges Gemini and the Dutch Bitvavo.

Now DCG chooses to shut down HQ Digital, write CoinDesk and The Information. “Due to the state of the economy in general and the prolonged crypto winter, we have decided to discontinue HQ. We are proud of the work the team has done and look forward to resuming the project in the future,” DCG said in a statement. According to The Information, HQ had $3.5 billion under management.

No direct impact on Grayscale and Genesis

It may be emphasized that HQ appears to be a subsidiary and will therefore be separate from Grayscale and Genesis. The assets that these two companies manage will therefore not be affected. Still, there is a lot of uncertainty about the situation. For example, Genesis wants more time to repay its debts.

Meanwhile, Grayscale tries to reassure investors in the GBTC fund by stating that it would buy back the shares if the fund were to be wound up. GBTC is listed on the stock exchange and has a high correlation with bitcoin (BTC), but because investors are selling their shares, there is currently a ‘discount’, as it were, compared to ‘real’ bitcoins. This could lead to a loss of confidence in GBTC.

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Grayscale has several other funds besides GBTC together at the time of writing about $15 billion being worthy. What Genesis has under management is not clear.

Earlier today, the crypto news reported that Genesis may even want to file for bankruptcy. Bitvavo, which will receive another $280 million from this party, reacted immediately to this news. You can read the response here.

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