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From left, Caroline Simmons, then Stamford mayor-elect; then-Mayor David Martin; Sen. Richard Blumenthal; Gov. Ned Lamont; Digital Currency Group CEO Barry Silbert; U.S. Rep. Jim Himes and state Department of Economic and Community Development Commissioner David Lehman gather on the fifth floor of 290 Harbor Drive in Stamford on Nov. 29, 2021 after a press conference to announce DCG’s plan to create more than 300 jobs in the state in the next five years.
Digital Currency Group founder and CEO Barry Silbert, U.S. Rep. Jim Himes and state economic development commissioner David Lehman gather on the fifth floor of 290 Harbor Drive in Stamford, Conn., on Monday, Nov. 29, 2021, after a press conference to announce that DCG planned to create more than 300 jobs in the state in the next five years.
Gov. Ned Lamont, left, and Digital Currency Group founder and CEO Barry Silbert talk on Monday, Nov. 29, 2021 at the future DCG headquarters at 290 Harbor Drive in Stamford, Conn.
STAMFORD – Nearly a year ago, executives from the fast-rising cryptocurrency conglomerate Digital Currency Group held a press conference at their firm’s under-construction headquarters in Stamford’s Shippan section, joined by some of the state’s top elected officials, to announce plans to hire several hundred people in the state in the coming years.
Today, the outlook for DCG and other crypto companies is much cloudier.
The crypto industry has been rocked by turmoil in recent months, highlighted by the collapse of crypto exchange FTX, which filed for bankruptcy earlier this month. DCG has faced headwinds as well, having recently laid off some employees. But the company said that it remains committed to Connecticut, while state economic development officials said that they are confident in DCG’s management.
“They don’t live in isolation, and they’re trying to navigate a more challenging market environment as markets ebb and flow,” David Lehman, commissioner of the state Department of Economic and Community Development and one of the attendees at last year’s press conference, said in an interview last week. “And that clearly is going on now, especially with the recent news around FTX.”
In response to an inquiry from Hearst Connecticut Media, DCG officials confirmed that in the past month the company has reduced its headcount from 76 to 66. Of the remaining employees, 58 are based in Stamford. Those numbers do not include the contingents at DCG subsidiaries such as digital currency asset manager Grayscale Investments, institutional-trading platform TradeBlock and wealth-management business HQ, which are also based in Stamford.
At the same time, the company is still making new hires.
“We recently made a series of internal changes to position DCG for its next phase of growth, including a streamlining of our departments alongside several promotions on our leadership team,” DCG said in a statement. “DCG is fully committed to Stamford and Connecticut.”
DCG announced its long-term hiring plans at the press conference held on Nov. 29, 2021 at its now-completed headquarters at 290 Harbor Drive in the Shippan Landing complex. The company was formerly based in Manhattan.
“We’re excited about building something really 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 retains more than 300 full-time jobs, DCG would earn a state grant of up to approximately $5 million. If it creates a smaller number of jobs, it would receive a smaller amount of grant funding.
“Connecticut taxpayers are not at risk for the business risk of DCG,” Lehman said. “If the jobs don’t transpire or they’re less (than expected), then ultimately the benefit is going to be less.”
No funding has been disbursed so far to DCG, which has not yet completed the signing of its contract with DECD. Company officials said that DCG is still on track with its paperwork.
“We have proceeded in good faith, submitting signed documents as recently as the summer of this year,” Amanda Cowie, a spokesperson for DCG, told Hearst last week. “We have a signed LOI and a financial plan with DECD, and a good working relationship with our business partners there.”
In response to a question from Hearst about whether the recent job cuts would affect the long-term hiring goals, DCG officials referred back to the statement provided for this article.
While the company has reiterated its commitment to Connecticut, it has still felt its industry’s volatility. Following FTX’s collapse, another of DCG’s subsidiaries, Manhattan-based crypto custody, lending and trading firm Genesis, told clients that it was temporarily suspending redemptions and new loan originations in its lending business.
The recent downfall of crypto hedge fund Three Arrows Capital has also affected the company. DCG, whose Genesis Asia Pacific Ltd., lent Three Arrows $2.4 billion, filed a claim of about $1.2 billion, The Wall Street reported. Three Arrows was ordered by a British Virgin Islands court to liquidate, after creditors sued over its failure to repay debts.
“This feels to me like the internet bubble of ’99,” U.S. Rep. Jim Himes, a member of the House Financial Services Committee and another of the attendees at the DCG press conference, said in an interview last week. “I’m sorry for the people who have lost money in cryptocurrency, but nothing disciplines investor behavior more than the very expensive education of being reminded of what risk looks like.”
At the same time, the crypto industry’s recent troubles have renewed debate about whether more regulation is needed.
“I think Congress needs to finish the process of establishing a regulatory framework,” said Himes, a Democrat who was re-elected Nov. 8 for an eighth term representing a district that covers most of Fairfield County. “We’ve been working on it. In the Financial Services Committee, we have a bipartisan bill to regulate stablecoins. We’re not over the finish line yet, but that will help.”
He added that, “more relevant to FTX, we need to set a framework for what I call the ‘plumbing’ – the exchanges, the clearinghouses, the custodians. We just need regulatory clarity there. Setting some clarity will give American investors an option here in the U.S., in a regulated environment.”
pschott@stamfordadvocate.com; twitter: @paulschott
Paul Schott is a business reporter at Hearst Connecticut Media, writing about the issues affecting small- and medium-sized businesses and large corporations based in southwestern Connecticut, with a focus on Stamford and Greenwich. He previously covered education for Greenwich Time and general assignments for the Westport News. Paul welcomes readers’ ideas and suggestions and strives to cultivate a robust dialogue with Hearst Connecticut Media’s audience.
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