Digital Currency Group is closing its institutional trading platform, TradeBlock, due to market and legal challenges.
According to a Bloomberg report, TradeBlock, a subsidiary of Digital Currency Group (DCG), will cease its operations on May 31. The platform offers trade execution and prime brokerage services to institutional investors in the crypto space.
A DCG spokesperson said the prolonged crypto market downturn and the challenging regulatory environment for digital assets in the US drove the decision to sunset TradeBlock.
TradeBlock was acquired by CoinDesk Inc., another DCG offshoot, in 2020. The financial details of the deal were not disclosed. CoinDesk integrated
TradeBlock’s indexing business into its own and spun out the remaining operations under the TradeBlock brand.
The move surprises some industry observers, as DCG had previously indicated that it was planning to focus on its core business.
DCG is a venture capital firm that has invested in over 200 crypto companies, including Coinbase, Circle, BitGo, Blockstream, Chainalysis and Ledger.
DCG owns five subsidiaries: CoinDesk, Foundry, Genesis, Grayscale Investments and Luno.
These businesses provide various services to the crypto industry, such as media and events, mining solutions, lending and custody, asset management and exchange.
DCG Struggles with Financial and Legal Issues
The closure of TradeBlock is one of many challenges that DCG is facing. The firm is also trying to sell its bankrupt lending subsidiary Genesis, which owes about $3.4 billion to its creditors.
Genesis filed for bankruptcy in January 2023 due to bad loans to failed crypto lenders; Babel Finance and Three Arrows Capital (3AC).
DCG had taken on some of Genesis’ debts to keep it afloat but failed to repay $630 million of debt to Genesis’ bankruptcy estate earlier this month.
This prompted a legal threat from Gemini CEO Winklevoss to sue DCG and Silbert for a $900 million loan payment
DCG said it intends to address its obligations to Genesis during a restructuring. In addition, the company stated that it is in talks with capital providers for growth capital and to refinance its outstanding intercompany obligations with Genesis.
The firm is also facing regulatory scrutiny from the US Securities and Exchange Commission (SEC), which has investigated its asset management subsidiary, Grayscale Investments, over its Bitcoin Trust (GBTC) product.
The SEC has been probing whether Grayscale violated securities laws by selling unregistered GBTC shares.
Grayscale has been trying to convert GBTC into an exchange-traded fund (ETF), but the SEC is yet to approve it. As of September 2021, GBTC is the world’s largest publicly traded Bitcoin fund, with over $50 billion in assets under management.
DCG is one of the most prominent and influential participants in the crypto industry. Its fate will have significant implications for the future of the sector.