The Digital Currency Group and its affiliates DCG cited liquidity problems as it suspended repayments, temporarily halting users from withdrawing their funds.
For off-chain staking services, The Digital Currency Group and its affiliates (DCG), which controls Bitvavo’s digital assets and deposits totaling $296.7 million (280 million euros), ceased payments due to liquidity issues during the weak market.
However, Bitvavo said that it would prefund the assets that were frozen, shielding consumers from DCG-caused service interruption. Exchanges are predicted to face a severe liquidity crisis as a result of consumers actively looking into self-custody options as a way to protect their money.
As it put a halt to repayments and temporarily prevented customers from withdrawing money, DCG claimed liquidity issues. To make sure that none of its users are vulnerable to DCG liquidity concerns, Bitvavo, on the other hand, chose to prefund the locked assets.
“The current situation at DCG does not have any impact on the Bitvavo platform,” read the announcement as the company guaranteed no service disruption to its users. According to Bitvavo, DCG intends to share a plan for reimbursing the outstanding deposits over time.
Furthermore, Bitvavo asserts that DCG’s debt would not negatively affect its ongoing business activities because the firm ” has been making a profit since its inception and is in a financially solid position.”
Even if DCG didn’t uphold their half of the contract, the corporation nonetheless provided assurances about the status quo.Bitvavo administers digital assets worth close to $1.7 billion (1.6 billion euros) that are kept 1:1 and completely redeemable by users. The largest trading volume cryptocurrency exchange, Binance, experienced a fall in liquidity as a result of the significant outflow of cash from exchanges.
Andrew Thurman, a Nansen technician, believes that the departure of significant market makers from the exchange may have contributed to the decline in liquidity.
