The CoinDesk sale: Chickens coming home to roost

Getting your Trinity Audio player ready...

In the blockchain world, where the mantra of decentralization beats like a drum, the reality is often a far cry from the consensus view of things. A small group of venture capitalists, big tech titans, and old money control much of the BTC economy and its “crypto” off-shoots. One such major center of control is the Digital Currency Group (DCG), a conglomerate of venture capitalist groups founded in 2015 and managed by investment banker Barry Silbert.

Their portfolio contains Coinbase (NASDAQ: COIN), Kraken, BitGo, Xapo, BitPay, Fireblocks, Blockstream, Circle, Foundry Pool and many, many more brands.

For years, I’ve been sounding the alarm, warning consumers about the looming storm of conflicts of interest and market manipulation that DCG, under Silbert’s leadership, has been brewing. After months of drama between Gemini and Genesis and rumors that DCG’s CoinDesk was looking for a buyer, this week, the drama is ratcheting up.

DCG’s influence is far-reaching. With its tentacles spread across the industry, DCG LPs like Mastercard (NASDAQ: MA), CME Ventures, and Bain Capital have been shaping the narrative, influencing market trends, and arguably manipulating the markets—often through their direction of “news” from CoinDesk, which functions as the most mainstream version of crypto industry reporting.

The News

Now, a syndicate of investors, led by Matthew Roszak of Tally Capital and Peter Vessenes of Capital6, is on the brink of acquiring CoinDesk. The deal, valued at about $125 million, is a stark reminder of the shifting sands in the blockchain economy. However, CoinDesk’s parent company, DCG, is expected to keep some ownership in the media, events, data, and indexes business, but it seems, DCG is being forced to loosen its grip on so many pillars of the industry.

The deal comes at a time when DCG is under immense pressure across their portfolio companies. Genesis Global Capital has gone bankrupt, harming Gemini Trust, and this has personified itself in a public feud between Silbert and the Winklevii. All this, while institutional-trading platform TradeBlock and its wealth-management unit HQ, have closed; leaving DCG in a precarious position. The legal battle with Gemini Trust Company has also exposed what might be a massive loss that Genesis took in the spring of 2022 after a default by one of its major borrowers, crypto hedge fund Three Arrows Capital.

The Chickens

DCG’s struggles are a testament to the chickens coming home to roost for Barry Silbert and his cohorts. For years, they’ve been playing fast and loose with the markets, allegedly using their influence over CoinDesk and paid influencers to shape the narrative and manipulate market trends. Now, they’re being held accountable. So, the CoinDesk deal is frankly a sign of the times.

The blockchain industry is attempting to feign maturity as regulators are signaling their readiness to police everything with a heavier hand. The SEC has already sued Coinbase, Ripple, and even DCG’s Genesis and Gemini over a $900 million crypto-lending program that allegedly violated investor-protection laws. With most of these still up in the air, there is likely another shoe ready to drop.

As the markets rebound, with BTC up over 80% after the collapse last year, the industry is at a crossroads. The days of unchecked influence and alleged market manipulation are coming to an end, and the CoinDesk deal is just the beginning.

For more insights into DCG and its influence on the crypto casino industry, I invite you to read my full article on CoinGeek here. In it, I delve deeper into DCG’s role in the scaling debate, the New York Agreement, and the conflicts of interest within their own portfolio. It’s a must-read for anyone wanting to understand their intricate web of influence.

In conclusion, the CoinDesk sale is a significant event in the blockchain economy. It’s a wake-up call for the community and a reminder that accountability is essential in any industry, including (maybe especially) the blockchain industry. As we move forward, let’s hope that this sale marks the beginning of a new era of transparency and accountability.

Unless the current industry “leadership” takes a hike, I’m not optimistic about it…

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase,
Ripple,Ethereum, FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.