Dutch cryptocurrency exchange Bitvavo says it has held 280 million euros ($297 million in USD) in Digital Currency Group (DCG), or 17.5% of the $1.6 billion euros Bitvavo says it manages in deposits and other assets. Bitvavo assured customers that the situation “has no impact whatsoever on the Bitvavo platform”.
Bitvavo claims in a blog post that DCG is “experiencing liquidity issues due to the current turbulence in the crypto market” and that DCG has “suspended redemptions until this liquidity issue is resolved.”
But a DCG spokesperson told Reuters that the funds are held by its “independent subsidiary” Genesis, not DCG. Decrypt has contacted DCG for further comment.
replied Bitvavo Reuters that it “held DCG responsible for the inaccessible funds.”
DCG, led by SecondMarket founder Barry Silbert, is one of the largest and best-known crypto companies in the world. It owns Genesis, Grayscale, CoinDesk, Foundry, and Luno.
The five weeks since the collapse of FTX and bankruptcy filing have not been good for DCG.
Genesis frozen recordings on his lending arm a month ago and hasn’t thawed them. Gemini, the exchange of the Winklevoss brothers (not a subsidiary of DCG), in turn had to pause payments on his Earn product because his partner is on Gemini Earn Genesis. Genesis reportedly owes Gemini Earn users $900 million.
The troubles at Genesis have cast doubt on DCG’s finances.
On Nov. 22, Silbert told shareholders that DCG owes Genesis $575 million, but that: “We’ve made it through previous crypto winters, and while this one may feel tougher, we’ll come out stronger collectively.” But on December 3, the Financial times reported that DCG owes Genesis $1.7 billion.
Grayscale Capital is also facing significant headwinds, with New York hedge fund Fir Tree Capital Management file a lawsuit against the company claiming that his Grayscale Bitcoin Trust (GBTC) had “potential mismanagement and conflicts of interest”.
The Grayscale Bitcoin Trust is a fund that allows investors to gain exposure to Bitcoin without buying Bitcoin themselves. It is currently trading at a -48.7% discount to the market value of the underlying asset, according to data from CoinGlass.
On Friday, crypto analyst Will Clemente, co-founder of Reflexivity Research, took to Twitter to note an aggressive sell-off over the past 48 hours of many cryptocurrencies tied to DCG, speculating that it could be DCG seeking liquidity.
Filecoin and Currentboth of which Clemente claimed DCG has exposure to are down about 20% and 10% in the past 24 hours according to data from CoinGecko.