This Bitcoin Exchange Has Announced: There Is A Liquidity Problem!

This Bitcoin Exchange Has Announced: There Is A Liquidity Problem!
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This Bitcoin Exchange Has Announced: There Is A Liquidity Problem!

Bitcoin. Bitvavo, a Dutch Bitcoin and altcoin exchange, made a statement. He said Friday he has $296.30 million locked in a US-based company, Digital Currency Group (DCG). As it is known, DCG is currently experiencing liquidity issues. Therefore, difficult times may be waiting for the stock market. Here are the details…

$290 million locked in US-based Bitcoin company

Bitvavo, a Netherlands-based cryptocurrency exchange, said Friday it has $296.30 million locked in a US-based company, Digital Currency Group (DCG). “DCG is currently experiencing liquidity problems… As a result, DCG has suspended refunds until this liquidity issue is resolved,” the Dutch firm wrote on its blog. DCG has several subsidiaries, including major cryptocurrency lender Genesis Global Capital, which froze withdrawals in November following the collapse of FTX.

This Bitcoin Exchange Has Announced: There Is A Liquidity Problem!

Bitvavo said it expects to be repaid in due time and has sufficient funds to “pre-pay a random locked asset at DCG.” He said his clients are not disclosed and can withdraw all their funds at any time. Bitvavo said it gave the money to DCG to offer its customers an artifact where they can earn interest on their cryptocurrency token deposits. Bitvavo is registered with the Dutch central bank (DNB) as a crypto asset services provider to prevent money laundering on its platform. However, it is not subject to prudent control by the DNB or the Dutch Financial Markets Authority (AFM).

DCG events: What happened?

Over the past weeks, Digital Currency Group (DCG) has issued a letter to investors clarifying its financial position, as well as showing the mid-company lending network of its subsidiary Genesis Global Capital. The crypto company has revealed that it currently has around $2 billion in debt, many of which are in-house loans. The loans consist of $575 million payable in 2023 and $1.1 billion in promissory notes payable to Genesis in 2032.

This Bitcoin Exchange Has Announced: There Is A Liquidity Problem!

The company also acquired a $350 million loan facility from an Eldridge-led cluster. According to experts, DCG used Grayscale Bitcoin Trust (GBTC) assets as collateral to obtain the first loan from Genesis. The company purchased $778 million of GBTC shares between March 2021 and mid-June 2022, hoping its net asset value would close. It received funding from Genesis Lending for these purchases. But with the Three Arrows Capital (3AC) boom in June 2022, DCG was forced to buy its GBTC. Unfortunately, 3AC also bought GBTC shares with Genesis Lending, which financed the deal.

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