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Bitcoin rally leads Grayscale's parent company DCG to profitability

The company’s financial boost comes amid an ongoing legal lawsuit with the New York Attorney General.

Bitcoin rally leads Grayscale's parent DCG to profitability

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After a tumultuous 2022, Digital Currency Group (DCG), the venture capital firm behind Grayscale Investments, has seen its fortunes revive as the company’s Q4 revenue for 2023 surged by 59% to $210 million, primarily fueled by the Bitcoin rally, according to Bloomberg’s Monday report.

The company’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) reached $99 million for the quarter, marking a significant recovery from the $7 million loss reported in the same period the previous year.

The crypto market’s rebound in the latter half of the past year, especially the notable growth in Bitcoin’s value, has played a crucial role in bolstering DCG’s financial outcomes. According to data from TradingView, Bitcoin’s price surged from around $27,000 to $42,500 during Q4 2023.

DCG’s asset management unit, Grayscale Investments, is also a key component of DCG’s resurgence, particularly following a court ruling in favor of its bid to convert its Bitcoin Trust into a spot Bitcoin ETF. The US Securities and Exchange Commission (SEC) eventually greenlighted Grayscale’s proposal, together with ten other spot Bitcoin product filings.

In 2022, DCG grappled with a staggering loss of over $1 billion, amidst efforts to restructure its Genesis lending platform. Adding to its challenges, DCG and its subsidiaries, Gemini and Genesis, have been embroiled in legal battles with significant regulatory bodies.

Genesis faces lawsuits from both the New York Attorney General (NYAG) and the SEC, primarily centered around the operations of its now-defunct Gemini Earn program. In a recent development, the firm reached a settlement with the SEC, agreeing to pay a $21 million civil penalty.

The NYAG lawsuit initially targeted retail investors who lost money in the Gemini Earn program. However, following an increase in complaints, NYAG Letitia James expanded the lawsuit against DCG, increasing the scope of the alleged fraud to over $3 billion.

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