In an effort to maintain liquidity, Digital Currency Group (DCG), a crypto venture capital firm has announced a stop to the quarterly dividends received by shareholders until further notice.
The company is committed to “strengthening our balance sheet by decreasing operational expenditures and maintaining liquidity,” according to the letter to shareholders published on January 17. DCG said that it was also thinking about selling a few of its portfolio’s holdings.
Financial troubles at a subsidiary, cryptocurrency broker Genesis Global Trading, which apparently owes creditors more than $3 billion, are the source of the company’s problems.
Customers are currently unable to withdraw money from Genesis after it stopped allowing withdrawals on November 16. As a result, Cameron Winklevoss, on behalf of his exchange Gemini and its users who have money on Genesis, requested in an open letter to DCG’s board that Barry Silbert be fired as the company’s CEO on January 10.
Winklevoss claims that Genesis owes Gemini $900 million for money that was leased to Genesis via Gemini’s Earn program, which allows clients to earn up to a 7.4% annual rate. Winklevoss also said that DCG owed Genesis $1.675 billion, although Silbert refuted this.
The United States Securities and Exchange Commission (SEC) added fuel to the fire shortly after Winklevoss’s letter by accusing both companies of selling unregistered securities via the Earn program on January 12.
Genesis’ issues initially surfaced after the withdrawal freeze on November 16, which it attributed to “extraordinary market turbulence” brought on by FTX’s demise, which led to “abnormal” volumes of withdrawals.
Genesis said it had around $175 million trapped on FTX on Nov. 10, less than a week earlier. DCG responded by providing Genesis with an emergency equity injection of $140 million in an effort to address Genesis’ liquidity problems.
Additionally, DCG controls Grayscale Investments and its family of digital asset trusts. It has also made investments in more than 200 crypto firms, including well-known brands such as stablecoin issuer Circle, blockchain research company Chainalysis, and digital asset exchange Kraken.
