Venture capital firm Digital Currency Group (DCG) has told shareholders it will suspend monthly dividend payments until further notice as it tries to maintain liquidity.
According to a letter sent to shareholders on January 17, the company is focused on “strengthening the balance sheet by reducing operating costs and maintaining liquidity.”
The financial problems stem from the problems of its subsidiary, crypto broker Genesis Global Trading, which is reported to have more than $3 billion in debt and DCG is also considering selling some assets in its portfolio.
Customers are now unable to withdraw funds from Genesis after stopping the withdrawal on November 16, which has been requested by Cameron Winklevoss – on behalf of the Gemini exchange and users with funds in Genesis – to call for the board of DCG to remove Barry Silbert as CEO of the firm on January 10 open letter .
Get an Update: Open Letter to Council @DCGco pic.twitter.com/eakuFjDZR2
— Cameron Winklevoss (@cameron) January 10, 2023
According to Winklevoss, Genesis owes Gemini $900 million in funds loaned to Genesis as part of the Earn Gemini program, which gives customers the ability to earn annual returns of up to 7.4%. He also claimed DCG owed Genesis $1.675 billion although DCG chief Barry Silbert denied this.
Soon, on January 12, the United States Securities and Exchange Commission (SEC) added fuel to the fire that charged both companies by offering unregistered securities through the Earn program.
related: Crypto Biz: DCG ‘carefully crafted deception campaign’?
Genesis’ problems were first seen on November 16, when it stopped customer withdrawals due to the fall of FTX, citing “unprecedented market turmoil” that caused “abnormal” withdrawals.
On November 10, less than a week before, Genesis revealed that there was about $175 million stuck in FTX, which prompted DCG to send Genesis an emergency equity infusion of $140 million in an effort to solve the liquidity problem.
DCG also owns Grayscale Investments and a series of digital asset trusts and has invested in more than 200 companies in the crypto industry including recognizable names such as blockchain analysis company Chainalysis, stablecoin publisher Circle and digital asset exchange Kraken.
Cointelegraph contacted DCG for comment but did not receive a response.