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Digital currency group suspends dividend to preserve liquidity

Delbert Williams IIBy No Comments2 Mins Read

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To preserve liquidity, venture capital firm Digital Currency Group (DCG) has told shareholders it will suspend quarterly dividend payments until further notice.

The company is focused on “strengthening its balance sheet by reducing operating expenses and maintaining liquidity,” according to a letter sent to shareholders on Jan. 17.

Its financial troubles stem from the woes of its subsidiary, cryptocurrency broker Genesis Global Trading, which reportedly owes more than $3 billion to creditors, and DCG has decided to sell assets in its portfolio. We are also considering selling part of the

Customers are currently unable to withdraw funds from Genesis after Genesis stopped withdrawals on November 16th. This prompted Cameron Winklevoss, on behalf of its users with funds on his exchanges Gemini and Genesis, to ask the DCG board to remove Barry Silbert. The company’s CEO in an open letter on Jan. 10.

According to Winklevoss, Genesis owes Gemini $900 million for funds loaned to Genesis as part of Gemini’s Earn program.He also claimed DCG owed Genesis $1.675 billion, although DCG boss Barry Silbert denied this.

Shortly thereafter, on January 12, the U.S. Securities and Exchange Commission (SEC) added fuel to the fire by accusing both companies of offering unregistered securities through the Earn program.

Related: Crypto Biz: DCG’s ‘carefully crafted campaign of lies’?

Genesis’ problems were first revealed on November 16, when it halted customer withdrawals in the wake of FTX, with “unprecedented market turmoil” leading to “abnormal” levels of withdrawals. The reason given was that it brought about

Less than a week later, on November 10th, Genesis revealed that FTX had about $175 million sitting in it. As a result, DCG sent Genesis a $140 million emergency equity injection to fix the liquidity problem.

DCG also owns Grayscale Investments and its suite of digital asset trusts, and over 200 companies in the crypto industry, including high-profile names such as blockchain analytics firm Chainalysis, stablecoin issuer Circle, and digital asset exchange Kraken. We have invested in more than one company.

DCG did not respond to a request for comment from Cointelegraph.