Digital Currency Group Halts Dividend Amid Genesis Crisis
Cryptocurrency conglomerate Digital Currency Group (DCG) said it halted dividend payments, telling shareholders that it's focused on strengthening its balance sheet by cutting costs as it copes with fallout from the FTX meltdown that was itself triggered by reporting by one of its own units.
The action is a further step taken by DCG to contain damage resulting from the collapse of FTX in late 2022, which rocked DCG's portfolio of crypto investments. DCG's problems center on the fate of one of its subsidiaries, crypto broker Genesis Global Trading, which is said to owe creditors more than $3 billion. Genesis has $175 million locked up in the failed FTX exchange and customers of the crypto lender have had their funds frozen since Genesis halted withdrawals on Nov. 16, 2022.
The problems at Genesis have led to a high-profile spat between DCG's founder and chief executive officer (CEO), Barry Silbert, and the Winklevoss twins, founders of crypto exchange Gemini. Genesis and Gemini partnered on the Earn crypto lending product, which also was forced to suspend withdrawals. Cameron Winklevoss said DCG's inability to repay the exchange was defrauding his company and its 340,000 investors, while calling for Silbert to step down.
DCG's efforts to cut costs by halting its dividend may not be enough to save the troubled conglomerate. Another DCG subsidiary, publicly listed crypto bank Silvergate Capital Corp. (SI), on Jan. 5 announced it experienced a shortfall of more than $8 billion in deposits. «Total deposits from digital asset customers declined to $3.8 billion at December 31, 2022, compared to $11.9 billion at September 30, 2022,» Silvergate Capital said.
At that time, Silvergate also announced it laid off 40% of its
Read more on investopedia.com
