Digital Currency Group’s Q3 Shareholder Letter: Surprise Over NYAG Lawsuit


Source: Digital Currency Group

Crypto industry powerhouse Digital Currency Group (DCG) has provided a response to its latest fraud lawsuit from the New York Attorney General (NYAG) last week, alongside updated Q3 financial figures.

The conglomerate raked in $188 million in the third quarter, compared to $153 million in Q3 2022. Meanwhile, the firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) were $69 million.

Most of that revenue came from the company’s asset management firm, Grayscale. The asset manager holds over $26 billion across its Bitcoin and Ethereum funds, for which it charges a 2% management fee for each.

In August, the company scored a major court victory over the Securities and Exchange Commission (SEC), bolstering its odds of converting its Bitcoin fund into a spot Bitcoin ETF. GBTC shares have rallied this year in response.

The update follows the full cessation of operations from DCG’s crypto trading unit Genesis last month, which went bankrupt due to massive exposure to other collapsed crypto firms including Three Arrows Capital, Alameda Research, and FTX.

In contrast to Grayscale, DCG is currently being hounded by regulators for how it managed its relationship with Gemini Earn – a retail crypto-earning company that allowed its customer’s assets to be managed by Genesis. Back in July, Gemini sued DCG and its CEO Barry Silbert for committing fraud by misrepresenting its financial status to their company, attempting to conceal a $1.1 billion balance sheet hole.

NYAG Letitia James’ more recent lawsuit alleges much the same, but also targets Gemini itself for withholding information from its creditors, alleging that the firm’s “internal analyses of Genesis showed that the company’s financials were risky.”

DCG Blind-Sided By Lawsuit

In its Q3 update, the conglomerate said it was “blindsided” by the NYAG’s lawsuit, arguing there is “no evidence of wrongdoing by DCG, Barry Silbert, or our employees.”

“She has previously made overly broad allegations about our entire industry in press releases,” DCG said.

The NYAG settled a case against crypto firms Bitfinex and Tether in 2021 for allegedly commingling client funds with corporate funds. She also sued KuCoin last year for listing multiple unregistered securities on its platform, one of which allegedly included Ethereum.

Since 2022, DCG has disbursed $225 million of debt payments to Genesis’s creditors.

CEO Silbert also shared in the update that his nine-year-old daughter is battling a cancer diagnosis.


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