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Crypto markets have witnessed the downfall of many major companies over the years, and this year we are seeing new bankruptcies as well. The recent major collapse was Genesis, which sounded alarms for DCG, one of the largest corporate groups in the crypto space. Now, DCG has sold its flagship company. So, what does all this mean?
CoinDesk Sold
According to a report by The Wall Street Journal, crypto media organization CoinDesk has been fully acquired by the cryptocurrency exchange Bullish. Recently, media outlet The Block had also sold 80% of its stake to a different exchange-related fund. However, what makes the sale of CoinDesk interesting is the financial distress of DCG.
As per the newspaper’s report, Bullish, led by former New York Stock Exchange (NYSE) President Tom Farley, made a deal with undisclosed financial terms. CoinDesk will operate as an independent subsidiary of the exchange. A publishing committee, chaired by former Wall Street Journal Editor-in-Chief Matt Murray, will also be formed. The current management team will continue their duties.
The Block and CoinDesk are among the largest media companies in the crypto space, and both directly transforming into subsidiaries of crypto exchanges could pose risks for the future.
So, what is the risk here? For instance, we saw many media outlets associated with SBF after the collapse of FTX, and even after the fraud was exposed, we witnessed articles supporting it. This indicates that similar incidents could occur more severely in the future.
Will DCG Collapse?
We extensively discussed DCG’s financial distress due to the negative premium of GBTC in 2021. Then, with the bankruptcy of Genesis and the collapse of its creditors, DCG faced even more difficulties. This led to the period where they started selling their companies due to the need for cash.
When the rumors of Genesis’ bankruptcy first emerged, DCG embarked on a search for $600 million in cash for urgent payments, but there was no suitable environment for finding it by the end of last year. Then, Genesis’ bankruptcy process began, and they ended up in court with Gemini. The recent sale also indicates that DCG’s urgent need for cash may still exist.
At this stage, the conversion of GBTC to Spot Bitcoin ETF seems to be a lifeline for DCG. In case the process prolongs, the company can overcome the transition period with the sale of CoinDesk.