In what seems like a lifetime ago Digital Currency Group, DCG, led by Barry Silbert seemed to be a behind-the-scenes powerhouse. DCG was founded as a venture capital fund and was an early investor in several crypto/blockchain companies that blew up over the years including Coinbase, Circle, and Chainalysis with over 200 investments overall. From those initial investments though three were acquired and became the huge money-makes including news source CoinDesk, Grayscale Investments, and lending platform Genesis. 

Due to being owned by DCG CoinDesk's independence and thus their credibility suffered, and I remember last year how CoinDesk's reporting was the butt of a joke. When you peel back the layers of what has gone on with DCG the last year and a half you realize that maybe the CoinDesk was not all that bad or corrupted in their reporting. They say this because it was CoinDesk who first highlighted and really brought attention to the FTX/Alamada Research relationship which rapidly led to the collapse of said exchange. When this occurred one of the firms that was hit hard by this was ironically enough was DCG's other big money maker Genesis. 

Genesis had been hit hard in 2022 by the collapse of crypto lender Babel Finance and Three Arrows Capital to the point that DCG had taken on some of the loans that Genesis had made to stay afloat. When CoinDesk broke the news about FTX and Alamada Research it not only shook the whole industry but it hit an already injured Genesis extremely hard. Genesis had made loans to Alamada Research which as we know went up in smoke and then was further hit by the collapse of FTX. Suddenly even with DCG trying to bail out Genesis, it was not enough and Genesis was driven into bankruptcy as well.

With crypto and blockchain in a bear market and these loans due from all of these companies Digital Currency Group had to raise cash and raise it as quickly as they could to prevent the whole VC from imploding. One of the ways that they have done this is by selling off, shutting down, or changing terms for the few products they own outright. They started with slashing the number of staff by 30% and pulling out of some regions of the world and when this was not enough they had to cave and sell off CoinDesk. Within just a few short months DCG went from having a diverse-three headed monster to having sold off one head, another head in bankruptcy, and then Grayscale. 

Mind you during this time DCG was not only paying for the bankruptcy proceedings which were immensely expensive themselves but they were also waging a legal battle with the SEC for Grayscale to be able to become an ETF. It is honestly pretty amazing that they are able to be around anymore even with the amount that this was and still is costing them. Out of the three big money makers, DCG is down to just one in Grayscale and even with it there is an issue. Before Genesis started to crumble they had used shares of Grayscale to back up the assets they were lending through Gemini. Once the collapse started Gemini came calling for those shares which have led to several legal hurtles that are still being worked through with over 60 million shares of Grayscale's Bitcoin Trust being up in the air. 

For the Digital Currency Group to survive in any sort of capacity that it once was their future is going to rely on the one thing they have left... Grayscale. Yes, the hundreds of other investments might make some money but they were wheeling and dealing with billions before the collapse. It is this issue that makes me think Grayscale's fee is so high right now as they are hoping to make some quick cash off of their fee which is multiple times higher than others to help keep the ship afloat. I could be entirely wrong of course but due to the fee being 1.5% and comparing it to other active ETFs the numbers just do not line up. Having a fee this high will not encourage people coming to the space to buy your ETF when other well-respected names are also offering the same product eroding the market share that Grayscale once had almost entirely to themselves. Only time will tell if this is the case but with outflows from Grayscale ongoing and the general uncertainty of millions of its shares, it causes one to wonder and speculate if the high fee is to lock in those already invested and "punish" them if they go elsewhere. 

Please know I am not a financial advisor and make sure you do your own research! If you enjoyed this article and would like to support me further below are a few referral links that if you used when signing up I would appreciate it! Also, follow me on Twitter @Cje95_

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