Today, critical developments for various crypto money companies are on the agenda. Barry Silbert’s Digital Currency Group (DCG) is shutting down HQ Digital, a wealth management-focused subsidiary it started last year. On the other hand, an $ 8 billion sales claim came for Silvergate, a crypto-focused bank. Here are the details…
DCG shuts down HQ Digital
Digital Currency Group (DCG), the crypto conglomerate owned by Genesis Trading and asset manager Grayscale, announced today that it is shutting down its asset management division called HQ Digital. The company was managing $3.5 billion in assets in December. A memo by The Information states that HQ Digital has been shut down due to the “overall economic environment and the ongoing crypto winter,” and that the company may reconsider the project in the future. It is reported that the partners of the company were taken by surprise by the decision. Remarkably, the news came on the same day as announcements that DCG would lay off 30 percent of its employees at Genesis Trading.
Towards the end of last year, a large number of altcoins owned in large quantities by Barry Silbert’s company saw a massive sell-off and price drop. As we reported on cryptokoin.com, this has caused even greater confusion and rumors that DCG CEO Barry Silbert may be launching his assets. Meanwhile, the pressure on Barry Silbert continues to mount. Gemini founder Cameron Winklevoss published an open letter earlier this week accusing Silbert of distracting him and giving him until January 8th to return the $900 million in client funds at Gemini Earn.
What’s going on at the cryptocurrency-focused bank Silvergate?
According to a report by the Wall Street Journal on Thursday, crypto bank Silvergate had to sell the $5.2 billion in debt securities it held on its balance sheet to cover nearly $8.1 billion of user withdrawals. As a result, it suffered a loss of $718 million, which reportedly exceeds the bank’s total profits since 2013. In addition, the company’s quarterly reports also revealed that it saw a sharp decline.
The bank had $11.9 billion worth of deposits from crypto-asset clients in 2021. At the end of 2022, this amount decreased to 3.8 billion dollars. Silvergate claimed to have $4.6 billion in deposits, compared to its remaining $3.8 billion at the end of Q4 2022. The crypto bank also had around $5.6 billion in debt securities that could be sold quickly, such as US Treasuries. At the time of writing, Silvergate’s stock has dropped 40 percent as the allegations surfaced.
As reported, Silvergate also laid off 40% of its staff, which equates to around 200 employees. Apart from that, the bank has abandoned its plans to launch its own cryptocurrency. Silvergate describes itself as “the leading bank for innovative businesses in fintech and cryptocurrency.” FTX, now bankrupt, was also a client of the company.
