As its owner tries to reassure investors, CoinDesk, the online news outlet whose expose on fractures in Sam Bankman-crypto Fried’s business provoked an industry-wide catastrophe, has drawn takeover interest, according to sources familiar with the situation.
Some of the attendees claimed that one of the approaches’ recommended $300 million acquisition price was too low. In addition to its well-known Consensus conference, CoinDesk was generating roughly $50 million in annual revenue through a combination of traditional web advertising.
It is a part of the privately held Digital Currency Group founded by Barry Silbert, which also consists of Genesis, a company that makes loans backed by client cryptocurrency holdings, and Grayscale Investments, which oversees funds that hold bitcoin, ether, and other cryptocurrencies. As turmoil and contagion spread throughout the cryptosphere as a result of Bankman-FTX Fried’s exchange failing, that company is under pressure.
Although there is no formal sales procedure for CoinDesk, a wide range of interested parties, including private equity firms, family offices, competing magazines like Blockworks, and hedge funds that look for distressed assets, have shown an interest in the company, according to the sources.
FTX and a sister hedge fund, Alameda Research, have unusually close relationships, according to a Nov. 2 piece by CoinDesk. It claimed that a large portion of Alameda’s funds were invested in a digital coin produced by FTX.
It was the first frayed end that was pulled. The incident damaged the public’s trust in FTX and its tokens, leading to client withdrawals in the billions that FTX was unable to handle. Less than a week later, the company filed for bankruptcy, and Bankman-Fried, who was accused of using customer funds to cover losses at his owned company Alameda, resigned as CEO.
CoinDesk is one of several businesses that might be facing an uncertain future as the epidemic continues to spread. Bitcoin has decreased more than 20% this month, and crypto lender BlockFi filed for bankruptcy on Monday.
Silbert has made an effort to ensure his own investors, including Western Union and CapitalG from Alphabet, that DCG is secure. It has $2 billion in debt, including $575 million borrowed from Genesis, its captive lender, who has stopped issuing new loans and has blocked consumer withdrawals.
In a message to investors last week, Silbert stated, “We have weathered other crypto winters, and while this one may feel more harsh, collectively we will come out of it stronger.”
Grayscale, the crown jewel of DCG, with more than $13 billion in assets spread across its various investment products and has so far withstood market turbulence. On November 18, it released a statement reassuring investors that their money is “safe and secure”.
Nobody is spared the crypto winter, including the media that sprang up to cover the sector
Early reporting on the FTX tale by CoinDesk enhanced its reputation as a trustworthy industry historian. One of the most popular conferences in the cryptocurrency world is Consensus; 17,000 people attended the Austin event last year.
But the journal and its rivals are at the mercy of a harsh climate as once-reliable crypto firms collapse one after another. Instead of charging for content like other trade newspapers do, CoinDesk and its competitors make money from events and advertising. The supply of both is rapidly dwindling. The buy-one-get-two-free Cyber Monday promotion for the Consensus conference might not be enough to persuade folks who have lost 90% of their net worth to shell out thousands of dollars to network.
The primary criticism of the once-high-flying space is that it produced value out of nothing and that when macroeconomic conditions changed or regulations were put in place, it would all come tumbling down like a house of cards. Despite the excellent job several publications have done in chronicling the collapse, collateral harm may include crypto-centric publications.
No business-related justification exists for which CoinDesk needs to be sold.
Because of the issues at Genesis, Silbert might have to pick between his kids and decide to let Genesis fail so that CoinDesk (and Grayscale) can keep moving forward.
Lenders often make more money than media companies, but the cryptocurrency sector is not like other industries. Considering its recent month, CoinDesk could be able to make it through a rough patch.
The FTX reporting from the outlet, which was referenced in outlets including The New York Times and The Wall Street Journal, has drawn new viewers to the website and its reporters.
Consensus may easily overtake Anthony Scaramucci’s crypto conference from last April, which was co-hosted by FTX in the Bahamas and drew notable attendees and significant media attention.
There is a vacancy to serve as the industry standard-bearer, and DCG has the necessary elements—especially with CoinDesk—to do so.
Interest from media and rivals
Some conventional financial actors have been drawn to the problems in traditional media. Restructuring specialists, opportunistic managers, and distress specialists are known for their ability to sift through the wreckage of a struggling sector for the hidden diamonds. The most well-known of these media owners, Alden Global Capital, took over the Chicago Tribune’s successful newsroom last summer and destroyed it through buyouts and employee fatigue.
They might go on to crypto media. Rivals as well as the ruthless investor types that print media reporters are all too familiar with are showing interest in CoinDesk. These newspapers understand what it’s like to be treated like a number because they’ve struggled with layoffs and office closings ever since hedge funds started paying attention to the sector.
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