Bitvavo, a bitcoin exchange, warned of liquidity problems at DCG and its affiliates, which prevent the platform from accessing its €280 million ($297 million).
Bitvavo has used services from Digital Currency Group and its affiliates (DCG), which currently have liquidity issues, to offer off-chain staking services to its clients.
If needed, Bitvavo will step in to protect our customers.
Read more on our blog:https://t.co/0X8hLTAlYa
— Bitvavo (@bitvavocom) December 15, 2022
“DCG is experiencing liquidity problems due to the current market turbulence. The company has suspended withdrawals until the situation normalizes. In the coming weeks DCG will present a plan to return the funds.” — according to the exchange’s blog.
Bitvavo management assured that the situation did not affect its operations. Clients can withdraw their funds instantly and at any time. The financial position is stable.
The exchange is ready to respond if DCG does not restore access to the funds.
Bitvavo manages deposits and digital assets worth €1.6 billion ($1.7 billion).
16 November, Genesis Global Capital froze withdrawals and the issuance of new loans, citing “increased withdrawal requests” from clients after the collapse of FTX. Shorty before that, the firm sought emergency financing in the amount of $1 billion, but was refused.
In December, media reports surfaced of rising to $1.8 billion demands on the platform. In particular, half of the mentioned amount went to Gemini clients, which chose Genesis as a partner for the Earn lending program.
A DCG spokesperson, speaking to Reuters, stressed that Bitvavo’s funds are with Genesis. The latter holds the necessary licenses from U.S. regulators and is an independent subsidiary.
Bitvavo’s press office did not agree with this version, insisting that DCG bears responsibility for the “freeze” of funds.
“We are in talks with several units of the group. Given their close interconnection, we place responsibility for the outstanding amount on DCG. For completeness, we refer to Digital Currency Group and its subsidiary companies.”, — explained to the agency.
17 December, Reflexivity Research co-founder Will Clemente drew attention to aggressive selling in the last two days of Filecoin (FIL), Horizen (ZEN), Ethereum Classic (ETC) and Near (NEAR). The community did not rule out that this was a sign of DCG actions, which is accumulating liquidity in this way.
Several crypto coins related to Barry Silbert’s DCG have been selling off aggressively this evening (FIL, ZEN, ETC, NEAR), leaving many speculators to wonder whether the selling is derived from DCG itself. pic.twitter.com/M9mkQrEI7q
— Will Clemente (@WClementeIII) December 16, 2022
In Bernstein, the liquidation of the Grayscale Bitcoin Trust was allowed as a solution to DCG’s problems.
Earlier, Genesis creditors were reported to plan to prevent its bankruptcy.
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