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CoinDesk Explores Sale as DCG Crisis Worsens

Cryptocurrency news provider CoinDesk is exploring options for a sale as its parent company, Digital Currency Group (DCG), continues to face financial strain amid fallout from the FTX exchange bankruptcy in late 2022.

Key Takeaways

  • Crypto news outlet CoinDesk, acquired by DCG in 2016, is looking for a purchaser.
  • CoinDesk is seeking an exit as its parent company suffers ongoing FTX contagion.
  • CoinDesk was the first to report about FTX’s financial irregularities with a scoop on the balance sheet of the crypto exchange’s hedge fund, Alameda Research, in early November 2022.

CoinDesk Hires Lazard to Explore Sale

CoinDesk has approached financial advisory firm Lazard Ltd. to explore the possibility of a sale, according to The Wall Street Journal. CoinDesk CEO Kevin Worth told The Wall Street Journal: “Over the last few months, we have received numerous inbound indications of interest in CoinDesk.”

The offers for CoinDesk—coming in for months—have exceeded $200 million, according to The Wall Street Journal. CoinDesk posted $50 million in revenue for 2022 from online advertising and its index and events business, the story said.

Interest in the company, founded in 2013, intensified after parent group DCG became embroiled in the FTX collapse. DCG subsidiary Genesis Global Trading is reportedly set to file for bankruptcy this week, as the crypto lender owes creditors $3 billion.

Genesis warned of a potential bankruptcy as early as Nov. 21, 2022, after the company disclosed it had $175 million locked in the FTX group. That led to problems with the project’s Earn lending program, which was a partnership with Gemini, a crypto exchange privately owned by the Winklevoss twins. Gemini was said to be owed $900 million by Genesis. The situation turned nasty recently, with Cameron Winklevoss accusing DCG of defrauding its 340,000 customers and calling for DCG CEO Barry Silbert to step down.

CoinDesk Scoop Eventually Imperils Parent

Digital Currency Group first acquired CoinDesk in January 2016 for a sum said to be in the region of $500,000 to $600,000. CoinDesk said at the time of the sale: “As this industry evolves and new players emerge, it’s clear that the informational needs of the individuals and companies in this space are increasing.”

CoinDesk’s reporting on FTX eventually unleashed shockwaves that hit Digital Currency Group and its subsidiaries, including the crypto news outlet itself. An article about FTX and its sister company, Alameda Research, revealed that a large portion of the company’s assets was held in its own FTT native token.

Shortly afterward, the Binance crypto exchange, which owned up to $2.1 billion of FTT, announced that it would be liquidating its entire holdings of the coin. That led to a run on the FTT token, and a proposed takeover of FTX by Binance swiftly failed after due diligence exposed the mess at the now-bankrupt FTX.

The Bottom Line

The disclosure by crypto news agency CoinDesk that it’s seeking a sale from its parent, DCG, and has received expressions of interest may give CoinDesk an exit from the financial pressures and strained crypto industry relations swamping DCG. CoinDesk’s announcement, only a day after DCG halted its dividend, also raises further questions about the health of the parent company.

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