- Crypto-focused media company CoinDesk considering a partial or full sale.
- The media outlet has retained investment bankers from Lazard Inc. as DCG’s financial troubles escalate.
Crypto-focused media company CoinDesk Inc. is exploring funding options as its parent company Digital Currency Group (DCG) has run into financial troubles.
The development was first reported by the Wall Street Journal (WSJ). Per the news coverage, CoinDesk has retained investment bankers at Lazard Ltd. to help it make a decision.
CoinDesk’s CEO Kevin Worth revealed that options it is looking at include a partial or full sale. According to Worth, the company has already received indications of interest from interested investors over the last few months.
Over the last few months, we have received numerous inbound indications of interest in CoinDesk,
Citing sources familiar with the matter, the WSJ added that DCG has received multiple unsolicited offers to sell CoinDesk in the past few months. The interested parties are willing to pay up to $200 million for the media outlet.
The sources note that DCG acquired CoinDesk in 2016 for $500,000. CoinDesk, meanwhile, generated $50 million in revenue last year from online advertising and its index and events business. Notably, CoinDesk’s Bitcoin Price Index is tracked by the $13.5 billion Grayscale Bitcoin Trust (GBTC).
Ironically, DCG’s troubles trace back to the collapse of FTX which in turn was first brought to the public’s attention by CoinDesk. A Nov. 2 report by CoinDesk questioned the health of both FTX and its sister trading firm Alameda Research. This sparked increased scrutiny of the firms which culminated in FTX filing for bankruptcy days later.
DCG’s financial troubles keep mounting
CoinDesk is not the only DCG-owned business that the FTX contagion is affecting. DCG-owned crypto brokerage firm Genesis Trading revealed after FTX’s collapse that it had $175 million in exposure to the exchange.
The situation has since escalated as Genesis has also suspended the lending product it offered to Gemini users. Genesis also recently laid off around 30% of its workforce and is planning to file for bankruptcy according to a Bloomberg report.
Gemini claims that Genesis owes its customers around $900 million. The SEC has also brought a lawsuit against Genesis and Gemini, charging the firms with violating U.S. Securities laws.
Meanwhile, DCG’s Grayscale and crypto mining infrastructure firm Foundry are also facing their own financial troubles. Grayscale’s premier GBTC fund is trading at a massive discount of about 50% to its net asset value (NAV).
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The debilitating situation has led to disgruntled investors calling for DCG founder and CEO Barry Silber to step down. In a recent open letter, Gemini co-founder Cameron Winklevoss stated that Silbert is unfit to run DCG or salvage the situation with the conglomerate’s creditors.
However, DCG has dismissed Cameron’s allegations as “malicious, fake, and defamatory attacks.” The firm also maintains that it is working with creditors to find solutions to the issues.
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