a Dutch cryptocurrency exchange, has claimed that Digital Currency Group (DCG), a major cryptocurrency investment firm, is experiencing liquidity problems. Bitvavo stated that it has 280 million euros ($297 million) in assets that are currently stuck with DCG. This represents 17.5% of the total deposits and assets that Bitvavo manages.
Bitvavo assured its customers that the situation will not have any impact on the Bitvavo platform. However, the exchange also stated that DCG has suspended repayments until the liquidity issue is resolved.
DCG has not yet responded to Bitvavo’s claims.
A spokesperson for Digital Currency Group (DCG) told Reuters that the funds in question are held by its “independent subsidiary” Genesis, not DCG. Decrypt has reached out to DCG for further comment.
In other words, DCG is claiming that the funds are not actually its own, but rather belong to a separate company that it owns. This would mean that Bitvavo’s claims about DCG’s liquidity problems are not entirely accurate.
It is still unclear what the exact situation is, and DCG has not yet responded to Decrypt’s request for comment. However, this development does shed some light on the matter and suggests that Bitvavo may have overstated the severity of DCG’s problems.
Bitvavo responded to Reuters by stating that it holds DCG responsible for the inaccessible funds. DCG, headed up by SecondMarket founder Barry Silbert, is one of the largest and best-known crypto firms in the world. It owns Genesis, Grayscale, CoinDesk, Foundry, and Luno.
The five weeks since FTX’s collapse and bankruptcy filing have not been good for DCG.
In other words, Bitvavo is still maintaining that DCG is responsible for the funds, even though DCG has claimed that the funds belong to its subsidiary, Genesis. This suggests that there is still some disagreement between the two companies about the ownership of the funds.
It is also worth noting that DCG has been facing some challenges in recent weeks. In addition to the FTX bankruptcy, DCG’s stock price has also fallen sharply. This suggests that the company may be facing some financial difficulties.
It remains to be seen how this situation will be resolved. However, it is clear that DCG is facing some challenges at the moment.
Genesis, a crypto lending firm, froze withdrawals on its lending arm one month ago and has not unfrozen them yet. Gemini, an exchange owned by the Winklevoss brothers (not a DCG subsidiary), had to pause redemptions on its Earn product because its partner on Gemini Earn is Genesis. Genesis reportedly owes Gemini Earn users $900 million.
On November 22, Barry Silbert, the CEO of Digital Currency Group (DCG), which owns Genesis, told shareholders that DCG owes Genesis $575 million but that, “We have weathered previous crypto winters, and while this one may feel more severe, collectively we will come out of it stronger.” However, on December 3, the Financial Times reported DCG owes Genesis $1.7 billion.
Grayscale Capital, another company owned by DCG, also faces significant headwinds. New York hedge fund Fir Tree Capital Management filed a lawsuit against the company alleging its Grayscale Bitcoin Trust (GBTC) had “potential mismanagement and conflicts of interest.”
The recent troubles at Genesis, Gemini, and Grayscale are a sign of the current turmoil in the crypto market. The market has been on a downward trend since November, and many crypto companies are struggling. It remains to be seen how these companies will weather the storm.
