Digital Currency Group stops dividends in an effort to preserve liquidity

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Venture capital firm Digital Currency Group (DCG) has told shareholders it is halting its quarterly dividend payments until further notice as it tries to preserve cash.

According to the letter sent to shareholders on January 17, the company is focused on strengthening our balance sheet by reducing operating expenses and preserving cash.

Its financial problems stem from the woes of its subsidiary, the crypto broker Genesis Global Trading, which owes more than $3 billion to its creditors and DCG is also considering selling some of the assets in its portfolio.

Customers are currently unable to withdraw funds from Genesis after withdrawals were halted on November 16, prompting Cameron Winklevoss on behalf of his Gemini exchange and his users with funds on Genesis to ask the board to DCG administration to remove Barry Silbert as CEO of the company in a Jan. 10 open letter.

Win an Update: An Open Letter to the @DCGco Board pic.twitter.com/eakuFjDZR2

— Cameron Winklevoss (@cameron) January 10, 2023

According to Winklevoss, Genesis owes Gemini $900 million for funds that were loaned to Genesis under the Geminis Earn program, which offers customers the opportunity to earn an annual return of up to 7.4%. He also claimed that DCG owed Genesis $1.675 billion, although DCG boss Barry Silbert denied this.

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

Related: Crypto Biz: DCG Carefully Crafted a Campaign of Lies?

Genesis’s troubles first surfaced on Nov. 16, when it halted client withdrawals following the FTX fallout, citing unprecedented market turmoil that led to abnormal levels of withdrawals.

On November 10, less than a week earlier, Genesis disclosed that it had approximately $175 million locked up on FTX, leading DCG to send Genesis an emergency equity injection of $140 million. in order to solve its liquidity problems.

DCG also owns Grayscale Investments and its series of digital asset trusts and has invested in more than 200 companies in the crypto sector, including recognizable names such as blockchain analytics firm Chainalysis, issuer of Circle stablecoins and digital asset exchange Kraken.

Cointelegraph has contacted DCG for comment but has not received a response.

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