Crypto Firm “Fully Engaged” in CT Amid Industry Turmoil

STAMFORD – Nearly a year ago, executives at fast-growing cryptocurrency conglomerate Digital Currency Group held a press conference at their company’s under-construction headquarters in the Shippan section of Stamford, along with some of the state’s highest elected officials, to announce plans to hire several hundred people in the state over the next few years.

The cryptocurrency industry has been rocked by turmoil in recent months, highlighted by the collapse of cryptocurrency exchange FTX, which filed for bankruptcy earlier this month. DCG has also faced headwinds, having recently laid off some employees. But the company said it remained committed to Connecticut, while state economic development officials said they were confident in DCG’s management.

“They’re not living in isolation and they’re trying to navigate a tougher market environment as markets come and go,” David Lehman, State Department commissioner of economic and community development and one of the attendees at last year’s press conference he said in an interview last week. “And that is clearly happening now, especially with the recent FTX news.”

In response to an inquiry by Hearst Connecticut Media, DCG officials confirmed that the company reduced its headcount from 76 to 66 in the past month. Of the remaining employees, 58 are based in Stamford. Those numbers don’t include contingents from DCG subsidiaries such as digital currency asset manager Grayscale Investments, institutional trading platform TradeBlock, and its wealth management business headquarters, also based in Stamford.

At the same time, the company is still making new hires.
“We have recently made a number of internal changes to position DCG for its next phase of growth, including a streamlining of our departments along with several promotions in our leadership team,” DCG said in a statement. “DCG is fully engaged in Stamford and Connecticut.”
DCG announced its long-term hiring plans during its press conference held on Nov. 29, 2021 at its now completed headquarters at 290 Harbor Drive in the Shippan Landing complex. The company was previously based in Manhattan.

“We are thrilled to be building something truly special here in Stamford,” DCG founder and CEO Barry Silbert said at the press conference. “We believe Stamford has the infrastructure, resources and talent to create a hub for the next generation of fintech and crypto companies.”
If it creates and maintains more than 300 full-time jobs, DCG would earn a state grant of up to approximately $5 million. If it creates fewer jobs, it will receive less subsidy.
“Connecticut taxpayers are not at risk from DCG’s corporate risk,” Lehman said. “If the jobs don’t materialize or are fewer (than expected), the benefit will ultimately be smaller.”
No funding has so far been disbursed to DCG, which has not yet completed the signing of its contract with DECD. Company officials said DCG is still on track with its paperwork.
“We proceeded in good faith, only submitting signed documents in the summer of this year,” DCG spokeswoman Amanda Cowie told Hearst last week. “We have a signed LOI and financial plan with DECD, and a good working relationship with our business partners there.

In response to a question from Hearst about whether recent job cuts would affect long-term hiring goals, DCG officials referred to the statement provided for this article.
While the company reaffirmed its commitment to Connecticut, it still sensed volatility in its industry. Following the FTX crash, another of DCG’s subsidiaries, Manhattan-based cryptocurrency custodian Genesis, told clients it was temporarily halting repayments and new loan creation at its lending business.
The recent fall of cryptocurrency hedge fund Three Arrows Capital has also hit the company. DCG, whose Genesis Asia Pacific Ltd. lent Three Arrows $2.4 billion, has filed a request for about $1.2 billion, Wall Street reported. Three Arrows was ordered by a court in the British Virgin Islands to wind up, after creditors sued over non-payment of debts.
“It looks like the Internet bubble of ’99 to me,” U.S. Representative Jim Himes, a member of the House Financial Services Committee and another DCG press conference attendee, said in an interview last week. “I feel sorry for people who have lost money in cryptocurrency, but nothing disciplines investor behavior more than the costly education of remembering what risk looks like.”
At the same time, the cryptocurrency industry’s recent woes have renewed the debate about the need for more regulation.
“I think Congress needs to complete the process of establishing a regulatory framework,” said Himes, a Democrat who was reelected Nov. 8 to an eighth term representing a district that covers most of Fairfield County. “We’re working on it. In the Financial Services Committee, we have a bipartisan bill to regulate stablecoins. We haven’t crossed the finish line yet, but this will help.”
He added that, “most relevant to FTX, we need to establish a framework for what I call the ‘plumbing’: the exchanges, the clearinghouses, the custodians. We just need regulatory clarity there. Establishing some clarity will give American investors an option here in the United States in a regulated environment.”

pschott@stamfordadvocate.com; twitter: @paulschott

Leave a Reply

%d bloggers like this: