CT-based crypto company Digital Currency Group turns down $5 million deal with state

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STAMFORD — Cryptocurrency conglomerate Digital Currency Group will not move ahead with its jobs-based incentives deal with the state that was announced nearly two years ago, but it is keeping its headquarters in Stamford.

The company will not receive any funding through the deal because it did not end up signing a contract with the state Department of Economic and Community Development. The decision to set aside the agreement, which was announced in November 2021, comes amid a difficult period for DCG, which has been grappling with job cuts and litigation on several fronts.

“DCG notified DECD recently they will not be moving forward with the agreement for incentives as outlined in our November 2021 announcement,” DECD spokesman Jim Watson said in a written statement this week. “We are ready to resume discussions with the company in the future if they anticipate new job growth in the state.”

In its own statement, DCG confirmed that it was not proceeding with the deal, but it did not rule out pursuing a new one.

“With our headquarters in Stamford, DCG remains committed to Connecticut,” the company said in the statement. “Our business strategy evolved due to the prolonged industry contraction over the past year and a half. We are committed to resume discussions with DECD on a new agreement that reflects this reality.”

DCG did not make anyone available to respond to follow-up questions about its reasons for not proceeding with the 2021 agreement and whether it had a timeframe for negotiating a new deal.

If DCG had gone through with the agreement, it would have been able to earn approximately $5 million in grant funding, if it created more than 300 full-time jobs in Connecticut. Today, DCG and one of its subsidiaries, digital-currency asset manager Grayscale Investments, have more than 100 employees based at their offices at 290 Harbor Drive, in the Shippan Landing complex in Stamford, according to company data.

DCG’s decision to forgo state funding is not unprecedented, as a number of other companies in recent years have passed up some or all of the jobs-based incentives for which they were eligible. For instance, Westport-based Bridgewater Associates, one of the world’s largest hedge fund managers, this year paid off the approximately $6.5 million balance of a state loan and decided against pursuing a potential $18 million in additional tax credits.

Ups and downs in past two years

DCG’s outlook was much brighter when it announced its arrival in Connecticut. The firm heralded the relocation of its main offices from Manhattan to Stamford, with a news conference held on Nov. 29, 2021, at 290 Harbor Drive.

“We’re excited about building something really special here in Stamford,” DCG founder and CEO Barry Silbert said at the news conference. “We believe Stamford has the infrastructure, resources and talent to create a hub for the next generation of fintech and crypto companies.”

The event was attended by several elected officials, including Gov. Ned Lamont, Sen. Richard Blumenthal, Rep. Jim Himes and Stamford Mayor Caroline Simmons.

“This is a state that was one of the most entrepreneurial states in the country, going back a long time,” Lamont told Silbert. “Then we lost a little bit of our entrepreneurial mojo, and we are getting it back, thanks to entrepreneurs like you.”

Simmons said that, “we have the potential to really rival cities like New York City and Miami and make Stamford the crypto capital of the world.”

Messages left in the past week for a spokesperson for Simmons inquiring about the extent of recent discussions between Simmons’ administration and DCG were not returned.

In the past year, DCG’s prospects have dimmed, as a “crypto winter” has set in. In the wake of the collapse in November 2022 of crypto exchange FTX, DCG’s Manhattan-based crypto lender, Genesis, temporarily suspended withdrawals and lending. (Last week, a New York jury convicted FTX founder Sam Bankman-Fried of fraud for stealing at least $10 billion from customers and investors.)

Now, Genesis and its parent company face mounting legal pressure. Genesis, DCG and Gemini, a crypto platform founded by Greenwich natives Cameron and Tyler Winklevoss were sued last month by New York Attorney General Letitia James for allegedly defrauding more than 230,000 investors, including at least 29,000 New Yorkers, of more than $1 billion. DCG had denied the allegations.

DCG and Gemini denied James’ allegations. But Gemini officials said that the lawsuit validated the complaint that Gemini filed in the summer against DCG and Silbert for alleged fraud related to the failed lending program on which Gemini and Genesis had partnered. DCG denied the allegations in Gemini’s lawsuit.

Gemini’s and Genesis’ dealings have also faced scrutiny from federal regulators. In January, the Securities and Exchange Commission charged the firms for what it said was the unregistered offer and sale of securities through their lending program.

Amid its legal issues, DCG has made a number of job cuts in the past year. Genesis laid off 30 percent of its staff at the beginning of the year, according to The Wall Street Journal.

Around the time that Genesis filed for bankruptcy, DCG closed its wealth-management business, HQ. At the time of its shutdown, HQ employed about 30 people, most of whom were based in Stamford. In May, DCG shut down its TradeBlock subsidiary. The company has not publicly commented on how many, if any, Stamford-based employees were affected by TradeBlock’s closure.