Crypto industry leader Digital Currency Group (DCG) has issued a response to the recent fraud lawsuit filed by the New York Attorney General (NYAG), along with the release of updated financial figures for the third quarter. The conglomerate reported a revenue of $188 million in Q3, compared to $153 million in the same period last year. The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to $69 million.
Impressive Revenue Growth and Dominance of Asset Management Firm
The majority of DCG’s revenue came from its prominent asset management firm, Grayscale. Grayscale currently holds over $26 billion in Bitcoin and Ethereum funds, charging a management fee of 2% for each. The company’s success is further highlighted by a recent court victory over the Securities and Exchange Commission (SEC), which enhances its prospects of transforming its Bitcoin fund into a spot Bitcoin Exchange Traded Fund (ETF). As a result, GBTC shares have experienced notable gains this year.
Cessation of Genesis Trading Unit Operations
DCG’s crypto trading unit, Genesis, recently ceased all operations due to extensive exposure to collapsed crypto firms such as Three Arrows Capital, Alameda Research, and FTX. This decision came after the unit faced significant financial difficulties, leading to its bankruptcy.
Unlike Grayscale, DCG currently faces regulatory scrutiny regarding its handling of the relationship with Gemini Earn, a retail crypto-earning company. Gemini Earn allowed its customers’ assets to be managed by Genesis. DCG and its CEO, Barry Silbert, were sued by Gemini in July for alleged fraud, based on their misrepresentation of the company’s financial status. Gemini Earn’s internal analyses reportedly revealed significant financial risks.
DCG’s Response to the Lawsuit
“We were completely taken aback by the lawsuit filed by the NYAG and want to emphasize that there is no evidence of any wrongdoing by DCG, Barry Silbert, or our employees,” stated DCG in its Q3 update.
“The NYAG has previously made sweeping allegations about our entire industry in press releases,” DCG added.
The NYAG has previously settled a case against cryptocurrency firms Bitfinex and Tether in 2021, claiming that client funds were commingled with corporate funds. The NYAG also sued KuCoin last year for listing unregistered securities on its platform, including Ethereum. In the case of DCG, the NYAG’s lawsuit targets not only the conglomerate but also Gemini for withholding information from its creditors.
Since 2022, DCG has successfully disbursed $225 million in debt payments to Genesis’s creditors, demonstrating its commitment to fulfilling its financial obligations.
Furthermore, DCG CEO Barry Silbert shared a personal note in the update, revealing that his nine-year-old daughter is currently battling cancer. This serves as a reminder of the resilience and strength required to face challenges, both personally and professionally.
