The parent business, Digital Currency Group (DCG), chose to shut down its wealth management division a few hours after it was reported that Genesis Global had sacked 30% of its workers. It is a sign that something is wrong, as the business has been dealing with serious liquidity issues at Genesis since FTX went bankrupt.
BREAKING: Genesis parent company Digital Currency Group just shut down its $3.5 billion wealth management division, per the Information.
— unusual_whales (@unusual_whales) January 5, 2023
Genesis from DCG is in trouble
The DCG subsidiary Genesis Global’s loan division announced last month that it abruptly stopped withdrawals due to a severe liquidity problem. Genesis has been making an effort to get new capital ever since for its lending section. The cryptocurrency exchange Gemini has recently been in the cross hairs when Genesis decided to stop allowing withdrawals.
Assurance from DCG to Investors
The CEO of DCG, Barry Silbert, assured investors that there was no immediate threat to the company in November, despite the fact that it owed its own subsidiary, Genesis, $575 million. At the time, the cryptocurrency industry was trying to gauge the extent of the seismic damage brought on by FTX’s collapse. Due to liquidity problems, Genesis temporarily stopped accepting withdrawals in the days after FTX’s bankruptcy; this action has not yet been taken again.
There’s a chance that liquidity problems don’t just affect DCG’s affiliates. In December, a creditor committee looking into Genesis’ financial troubles hinted that DCG might have liquidity problems. Bitvavo, a Dutch cryptocurrency exchange, claimed the same thing that month, claiming DCG owed it close to $300 million and could not repay it.