TradeBlock will officially start the closing process on May 31st.
Digital Currency Group (DCG), a New York-based venture capital firm that invests and provides services for crypto companies, is closing its TradeBlock subsidiary.
According to May 25 a report According to Bloomberg, the company, headed by Breanne Madigan, who previously worked at Goldman Sachs for 15 years, will start closing the platform by the end of the month, namely on May 31.
The TradeBlock platform, dedicated to providing deal execution and prime brokerage services to institutional investors only, was acquired by CoinDesk, a crypto news media owned by DCG, through an undisclosed financial transaction in 2020.
After the acquisition, Media House integrated TradeBlock’s indexing services into its operations, while other aspects of the company were transformed into what is known as TradeBlock.
DCG blames the long winter on crypto and the regulatory uncertainty of the shutdown
Unfortunately, DCG has decided to cease operations of the institutional trading platform after three years of service due to prevailing economic conditions and a prolonged crypto winter, which has greatly affected the entire industry.
The company also blamed the regulatory environment surrounding the emerging economy in the US as a significant contributor to the business’ failure.
“Due to the state of the broader economy and the long crypto winter, combined with the challenging regulatory environment for digital assets in the United States, we have made the decision to cancel the institutional trading platform side of the business,” a spokesperson told Bloomberg.
DCG is facing financial challenges
DCG and its portfolio of companies have faced a number of financial challenges over the past year. These financial constraints stemmed in part from the November collapse of crypto giant FTX, which forced several entities, including BlockFi, into bankruptcy.
The latest closure makes it the second business the company will close in 2023. In January, DCG announced the divestment of its wealth management company, HQ Digital, citing difficult economic conditions.
Venture capital has reduced a large portion of its workforce across several units to weather the storm. DCG cut 13% of its internal staff at the start of the year.
One of its subsidiaries, Luno, laid off 35% of staff in January, cutting about 330 jobs, followed closely by Genesis, its stock brokerage. Genesis has experienced a liquidity crunch that has suspended deposits and withdrawals as well as refunds and issuance of new loans from the platform. The move comes after it failed to raise $1 billion from investors to support its business.
In a recent turn of events, DCG failed to make the $630 million debt payments owed to Genesis. The company took out hundreds of millions in loans from Genesis last year at “market rates.” The money was supposed to be repaid in May 2023. However, DCG has failed to honor the loan agreement and is actively pursuing discussions to refinance its debt.
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