DCG to cease operation of its institutional trading subsidiary
Digital Currency Group (DCG) is shutting down one of its subsidiaries offering trading services to institutional investors, with the venture capital conglomerate citing a tough regulatory environment along with the bear market as reasons for its action.
DCG is set to sunset TradeBlock, a subsidiary focused on institutional investors and offering them trade execution, pricing, and prime brokerage services, by the end of May 2023.
According to a statement by a DCG spokesperson to Bloomberg, the decision to close down the subsidiary was taken due to the state of the broader economy, the prolonged crypto winter, and the challenging regulatory environment for digital assets in the US.
TradeBlock was initially purchased by crypto news outlet CoinDesk – a DCG subsidiary – for an undisclosed amount in 2020. While some parts of TradeBlock were folded into CoinDesk’s operations, the others became a new entity known as the TradeBlock trading platform. Breanne Madigan, a former Goldman Sachs executive, headed the business.
Meanwhile, the latest move comes shortly after DCG closed down its wealth management arm, HQ Digital, in January 2023, for a similar reason. In 2022, the firm recorded a loss of over $1 billion, primarily due to collapsed crypto hedge fund Three Arrows Capital defaulting on its loan to cryptocurrency lender Genesis Global Trading, a DCG subsidiary.
As previously reported by crypto.news, DCG failed to meet the deadline for loan repayment of approximately $630 million. Gemini said that it was working with Genesis and two groups of creditor committees to consider giving a forbearance to DCG to prevent the venture capital firm from defaulting.