Genesis owner DCG has closed its wealth management unit as the crypto giant battles a stream of troubles
- Crypto giant Digital Currency Group has shut its wealth management unit, reports said Thursday.
- Troubles have mounted for DCG units after FTX's collapse, which shook faith in the crypto industry.
Genesis parent Digital Currency Group has closed down its wealth management unit, the latest in a stream of troubles to hit the crypto conglomerate as the collapse of FTX rattles the digital asset sector.
DCG's crypto businesses include financial services provider Greyscale, in addition to embattled broker Genesis and wealth manager HQ. New York-based HQ managed about $3.5 billion in assets as of December, according to The Information, which first reported the closure.
"Due 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," DCG said in a statement reported by several media outlets.
"We're proud of the work that the team has done and look forward to potentially revisiting the project in the future," it added.
The move came the same day that Genesis slashed 30% of its workforce, citing "unprecedented industry challenges".
Troubles have been mounting at DCG subsidiaries after leading crypto exchange FTX's collapse, which shook faith in the crypto industry.
At the same time, the digital asset sector has had to grapple with a huge selloff in cryptocurrencies, known as a "crypto winter". Investors have jumped out of riskier assets as inflation at 40-year highs drove massive interest rate hikes by the Federal Reserve.
Genesis' lending arm, Genesis Global Capital, halted customer withdrawals in November. It said the FTX implosion had prompted a flood of withdrawals that outstripped the firm's liquidity, and its derivatives business had $175 million locked in FTX trading accounts.
After that, Genesis' interim CEO told its clients the brokerage needs more time to get its finances under control, promising to find a solution. Its crypto-lending unit reported it had $2.8 billion in total active loans as of the third quarter of 2022.
Meanwhile, DCG is entangled in a tussle with Gemini over $900 million its Genesis businesses borrowed from the crypto exchange's customers. Gemini cofounder Cameron Winklevoss has accused DCG's CEO Barry Silbert of stalling on working out a way to pay back customers of Gemini's Earn interest-bearing account program.
DCG did not immediately respond to Insider's request for comment.