Summary
- CoinDesk faces questions about independence as its parent company Digital Currency Group's financial troubles come to light.
- CoinDesk is covering its own owners, raising concerns about its independence.
- CoinDesk's parent company is facing financial troubles and regulatory actions.
CoinDesk, one of the first news sites focused on the cryptocurrency industry, is facing questions about the financial health and operations of some of its parent company's subsidiaries. On November 2, the cryptocurrency exchange FTX was valued at tens of billions of dollars and its CEO, Sam Bankman-Fried, was a billionaire and a prominent figure in the crypto world. However, that morning, CoinDesk published an article suggesting that FTX's sister company, Alameda Research, was on a shaky financial foundation. This led to a cascade of problems for FTX and Bankman-Fried, including bankruptcy and fraud charges.
This article, by journalist Ian Allison, raised the profile and readership for CoinDesk. However, it also highlighted the challenges faced by many cryptocurrency publications, which have been accused of fawning over the industry and are in the unusual position of covering an industry that helps fund their operations, raising debates about their independence.
Now, the complications for CoinDesk are even greater. Its parent company, Digital Currency Group (DCG), a venture capital firm with stakes in numerous crypto projects, is facing its own financial troubles and questions about its operations. This is part of the broader fallout in the crypto industry since FTX's collapse. This month, Genesis, a cryptocurrency lender owned by DCG, laid off 30 percent of its staff.
On Thursday, federal regulators charged Genesis with offering unregistered securities through a program that promised investors high interest on deposits. The regulators stated that Genesis and Gemini Trust, a cryptocurrency exchange, raised billions of dollars of assets from hundreds of thousands of investors without registering the program.
These developments have forced CoinDesk to cover its own owners, publishing numerous articles about related developments in the past couple of weeks. "We cover DCG like any other company, that’s part of our regular coverage," said CoinDesk's chief content officer, Michael Casey. Amanda Cowie, Digital Currency Group's head of communications, stated that the company was staying out of editorial decision-making at CoinDesk and emphasized the importance of the leading outlet running independently.
CoinDesk began in 2013, five years after Bitcoin was introduced. The publication, based in New York, stayed small for years but its growth accelerated during the crypto boom that peaked in 2021, and today the company has 160 employees in countries including the United States, India, and Turkey. CoinDesk has interns and a 24/7 news channel, and its coverage regularly includes articles about policy, cryptocurrency markets, and the idea of a decentralized internet known as web3. The publication has newsletters that discuss crypto investing as well as interactions between the government and the industry.
It is worth noting that CoinDesk covered FTX before Allison's article, including Bankman-Fried's political donations, the addition of a former federal regulator to the company's board, and its potential acquisitions. Allison had been collecting information on FTX's financial state when, at a conference in October, he was told off the record about weakness in Alameda's balance sheet. The source said FTT, a cryptocurrency that FTX had invented for traders to use on its platform, was being used to borrow other crypto assets. Allison later obtained the balance sheet at the center of his article.
The article drew readers to the site. In November, the publication had 17 million page views, up 96 percent from October, the company said. However, the developments have also raised questions about CoinDesk's independence and the challenges faced by publications covering an industry that helps fund their operations.