The struggling venture capital firm Digital Currency Group, which has invested in more than 200 cryptocurrency projects, has announced the suspension of its quarterly dividend all in a bid to maintain liquidity . This announcement comes as one of its subsidiaries, the lending division of Genesis Global Capital, is striving to avoid bankruptcy.
According to a Jan. 17 letter to shareholders, the decision comes as the company works on “strengthening our balance sheet by decreasing operating expenses and maintaining liquidity”. DCG stated that it was also thinking about selling a few of the assets in its portfolio.
The firm’s financial problems stem from that of its subsidiary, cryptocurrency broker Genesis Global Trading, which is said to owe creditors more than $3 billion.
Owing to the fact that Genesis suspended withdrawals on Nov. 16, customers are currently unable to access their funds. As a result, Cameron Winklevoss, on behalf of his exchange Gemini and the users who had money on Genesis, requested that Barry Silbert be fired as CEO of the company in an open letter to the DCG board on Jan. 10.
Genesis owes Gemini $900 million, according to Winklevoss, for funds that were lent to Genesis as part of Gemini’s Earn program, which allows clients to earn up to a 7.4% annual rate. However, Silbert refuted Winklevoss’ assertion that DCG owed Genesis $1.675 billion.
Despite being a cornerstone of the cryptocurrency sector, Barry Silbert’s DCG has suffered from a protracted decline in digital assets and the effects of the FTX’s collapse. Genesis has also hinted that it would file for bankruptcy if it couldn’t raise the necessary funds after the halt of withdrawals in November 2022.
Soon after Winklevoss’s letter, the US Securities and Exchange Commission (SEC) escalated the situation by accusing both businesses of selling unregistered securities through their Earn program on January 12, 2022.
The withdrawal freeze on November 16 was Genesis’ first sign of trouble, which it attributed to “unprecedented market turmoil” brought on by the demise of FTX, which led to “abnormal” withdrawal by users.
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Genesis had earlier disclosed on Nov. 10 2022 that it had around $175 million stuck on FTX, which prompted DCG to send Genesis an emergency equity injection of $140 million in a bid to address its liquidity concerns.
At the same time, US investigators are probing the internal financial transactions of DCG. To assuage worries, Silbert wrote in a letter this month that he has “no doubt that DCG will emerge from this year a stronger company.”
Additionally, DChttps://cryptotvplus.com/2023/01/why-industrial-not-consumer-metaverse-is-more-important/ZG controls Grayscale Investments and its portfolio of digital asset trusts. It has also made investments in a number of businesses operating in the cryptocurrency industry, including stablecoin issuer Circle, blockchain analysis company Chainalysis, and digital asset exchange Kraken.
With the recent turn of events, the big question remains: Will this new turn of events affect these affiliated firms?
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