Crypto conglomerate DCG is shutting down its Stamford-based company

STAMFORD — Embattled cryptocurrency conglomerate Digital Currency Group is closing one of its Stamford-based subsidiaries, while another of its companies has filed for bankruptcy and faces federal charges — pressures that reflect widespread disruption in its industry.

In a letter to shareholders last week, DCG founder and CEO Barry Silbert said the company has “made the difficult decision to close” HQ, the asset management company that DCG founded in 2020. It employs about 30 people, most of whom are based in Stamford, the center will be dissolved by the end of this month.

“While we still believe in the concept of HQ and its outstanding management team, the current crisis is not conducive to the short-term sustainability of that business,” Silbert said.

The closing of the main office follows last year’s opening of DCG’s headquarters at 290 Harbor Drive in the Shippan Landing complex, after the company relocated from Manhattan. DCG still operates there, as do those of two other subsidiaries, digital currency asset manager Grayscale Investments and institutional trading platform TradeBlock.

DCG officials were not immediately able to provide a current number of employees at their Stamford offices. In November, after earlier layoffs, the company said it had 58 employees based in Stamford, not including branch staff.

The company had a much more optimistic outlook when it announced its arrival in Connecticut in November 2021 with a press conference at 290 Harbor Drive attended by elected officials, including Gov. Ned Lamont, Sen. Richard Blumenthal and Rep. Jim Himes. If it creates and retains more than 300 full-time jobs, DCG would earn a grant of up to approximately $5 million from the state Department of Economic and Community Development. If it creates fewer jobs, it receives a smaller amount of grants.

“There has been no talk of renegotiating or changing that deal in any way,” Alexandra Daum, DECD commissioner-designate, said in an interview. “We wish them well as they navigate the current turmoil in the industry.”

DCG, which has not yet completed signing the contract with DECD, has not been disbursed so far. Company officials said DCG is still on the way with its documentation.

“We proceeded in good faith, submitting signed documents as early as summer (2022),” DCG spokeswoman Amanda Cowie said in a statement. “We have a signed LOI (letter of intent) and financial plan with DECD, and a good working relationship with our business partners there.”

DCG subsidiary files for bankruptcy, faces federal charges

Other DCG companies are also under pressure, including Manhattan-based cryptocurrency startup Genesis, which filed for bankruptcy on Thursday.

Genesis has been in trouble for some time, having temporarily suspended withdrawals and lending in November following the collapse of crypto exchange FTX. Earlier this month, he laid off 30 percent of his staff, according to The Wall Street Journal.

The company is also in the sights of federal regulators. Last week, the Securities and Exchange Commission charged Genesis and the Gemini crypto exchange with what it said was an unregistered offering and sale of securities through the Gemini Earn crypto-asset lending program.

Launched about two years ago, Gemini Earn allowed investors to lend their crypto assets to Genesis in exchange for Genesis’ promise of interest payments. In November, Genesis announced that it would not allow Gemini Earn investors to withdraw their assets because Genesis “does not have sufficient liquid assets to meet withdrawal requests following volatility in the crypto asset market,” the SEC said in a press release. At that point, Genesis held roughly $900 million in assets for 340,000 Gemini Earn investors, the SEC said. Gemini terminated Gemini Earn earlier this month, but investors were still unable to withdraw their assets, according to the SEC.

“We allege that Genesis and Gemini offered unregistered securities to the public, circumventing disclosure requirements designed to protect investors,” SEC Chairman Gary Gensler said in a press release statement. “Today’s charges build on previous actions to make clear to the market and the investing public that cryptocurrency platforms and other intermediaries must comply with our time-tested securities laws. This is the best way to protect investors. It promotes confidence in the markets. It’s not optional. That’s the law.”

Before the SEC charges were announced, Gemini co-founder Cameron Winklevoss blamed Silbert for Genesis’ recent troubles.

“There is no way forward as long as Barry Silbert is CEO of DCG,” Winklevoss, a Greenwich native, said in an open letter last week to DCG’s board. “He has proven that he is not capable of leading DCG and that he is unwilling and unable to find a solution with creditors that is both fair and reasonable.”

DCG responded in a message sent from its Twitter account, saying: “This is another desperate and unconstructive publicity stunt by @cameron to deflect blame from himself and Gemini, who are solely responsible for managing Gemini Earn and marketing the program to their clients.”

Along with his twin brother and fellow Gemini founder Tyler Winklevoss, Cameron Winklevoss was also involved in a now-settled legal battle with Facebook co-founder Mark Zuckerberg. The conflict between the Winklevoss brothers and Zuckerberg was recorded in the 2010 film “The Social Network”.

[email protected]; twitter: @paulschott

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