By Nathan Ferguson
Bitvavo, a Dutch crypto exchange, claims more than 270 million Euros are stuck in the Digital Currency Group. The amount represents about 17% of the exchange’s reported assets, worth around 1.5 billion Euros. However, Bitvavo assured its users that this situation does not impact its platform.
Bitvavo says DCG was experiencing liquidity issues due to the ongoing crypto bear market and paused repayments until it resolved the problems. However, DCG’s spokesperson stated that Genesis, an independent subsidiary of DCG, holds the funds.
Bitvavo told Reuters that it is holding DCG responsible for the inaccessible money. The digital currency firm DCG, cofounded by Barry Silbert, is among the top players in the cryptocurrency world. It has a roster of subsidiaries, including Grayscale, Genesis, and CoinDesk. But since FTX’s bankruptcy filing earlier last month, things have not been smooth for DCG.
Digital Currency Group Subsidiaries Continue to Face More Troubles
Genesis has suspended withdrawals on its lending arm for about three weeks, though the firm is yet to reinstate them. The Winklevoss brothers-owned crypto exchange Gemini announced that it was halting redemptions from its product “Earn” because of an alleged debt owed to the company by Genesis.
The recent troubles at Genesis have raised questions about DCG’s financial stability. In mid-November, Silbert informed shareholders that the Digital Currency Group owes its Genesis over $570 million but assured them that since the firm had survived in past crypto winters, it would also come out stronger in this one. However, in early December, Financial Times reported the actual amount owed stands at $1.6 billion.
Elsewhere, Fir Tree Capital Management, a New York hedge fund, recently filed a lawsuit against DCG’s subsidiary Grayscale. The suit alleges Grayscale Bitcoin Trust has conflicts of interest and potential mismanagement.
Thanks to Grayscale Bitcoin Trust, investors can now get exposure to Bitcoin even without purchasing It themselves. According to data from CoinGlass, it currently trades at 47% lower than the market value of the underlying asset.
Crypto Analyst Suggests DCG Could be Looking for Liquidity After Noting Huge Asset Selloffs
On Friday, Will Clemente, a crypto analyst and Reflexivity Research co-founder, took to his Twitter account to inform crypto fans of aggressive selloffs in the past two days of many crypto assets connected to DCG, suggesting that it could be DCG seeking liquidity. Also, FileCoin, a crypto Clemente claims DCG has exposure to, has dropped by 20% in the past 24 hours, per CoinGecko.