Struggling crypto empire DCG Suspends Dividends, sparks concern of possible bankruptcy

Key Takeaways

  • DCG has earlier closed its wealth management division
  • DCG owes Genesis $575 million

Struggling crypto empire Digital Currency Group(DCG) had suspended its dividends until further notice.

“In response to the current market environment, DCG has been focused on strengthening our balance sheet by reducing operating expenses and preserving liquidity. As such, we have made the decision to suspend DCG’s quarterly dividend distribution until further notice,” DCG’s letter to the shareholders reads.

The latest development comes days after DCG closed its wealth-management division, igniting concerns of possible liquidity issues at the firm. Earlier this month, DCG had also announced that Genesis Global Trading Inc., the brokerage unit of Genesis, was laying off roughly 30% of its staff.

DCG, which owns Genesis Trading and cryptocurrency asset manager Grayscale, is now facing financial distress. Its lending platform Genesis reportedly owes creditors over $3bn, which has prompted DCG to sell assets in its venture portfolio to raise money.DCG owes Genesis $575 million.

Genesis had suspended withdrawals in the days following FTX’s implosion due to liquidity issues. DCG CEO Silbert had then stated that intercompany loans between DCG and Genesis were made in the ordinary course of business and “always structured on an arm’s length basis and priced at prevailing market interest rates.”

A creditor committee probing Genesis’ financial woes had earlier hinted that DCG might be facing its own liquidity issues. In December, crypto exchange Bitvavo also alleged that DCG owed the exchange around $300 million.

DCG has been under the media limelight for a while. Its CEO, Barry Silbert, and Cameron Winklevoss, the co-founder of crypto exchange Gemini, are now engaged in a public feud over customer assets, with each other throwing accusations over who should be held accountable for the collapse.

Crypto experts believe the possible scenario ahead of struggling DCG is either forcing themselves “into selling its sizable positions in GBTC- the Grayscale Bitcoin Trust or filing for bankruptcy protection.

DCG, founded in 2015 by Barry Silbert, owns five subsidiaries which include CoinDesk, Foundry, Genesis, Grayscale Investments, and Luno.

Saniya Raahath
Saniya Raahath

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