European-based crypto exchange Bitvavo announced recently that it had rejected a 70% debt repayment from the venture capital Digital Currency Group (DCG).
Bitvavo Reveals $300.8M Exposure to DCG
Crypto custodian Bitvavo utilizes services from DCG and its units to offer off-chain staking features to its customers. In a mid-December statement, Bitvavo revealed that it issued over $300.8 million to DCG to facilitate the service. At that time, the venture capital stated that the debt would be repaid.
However, the liquidity struggle at DCG caused it to withhold from repaying its debt to Bitvavo. According to the crypto custodian, the venture capital stated that it would repay the $300.8 million debt only after settling its financial issues.
The latest report shows that DCG has failed to uphold its agreement to repay the debt. Instead, it opts to repay 70% of its debt, representing about $210.5 million. Bitvavo rejected the offer because it believes that DCG, which managed assets worth $50 billion as of September 2021, can repay the entirety of the debt. The exchange clearly stated that such action “is not acceptable.”
Meanwhile, Bitvavo reassured its clients that their assets are safe and backed 1:1, despite the ongoing debt repayment issue. The crypto custodian, which has a user base of over one million users, stated that the withdrawals of users’ funds could take place anytime. The custodian equally boasts of $1.7 billion in its assets under management.
Gemini Co-founder Accuses DCG of Fraud
On January 10, Cameron Winklevoss, the co-founder of the crypto exchange Gemini, published in an open letter that DCG is responsible for fraudulent acts.
Gemini adopts the lending services of DCG’s subsidiary, Genesis Trading. Since the insolvency of Genesis came to light, Gemini has lost access to $900 million worth of assets to the lending firm.
The Gemini co-founder now argues that the true financial condition of Genesis was not revealed. He added that DCG had concealed the liquidity crisis faced by Genesis.
Still, Winklevoss believes the issue could be settled if Barry Silbert, the current CEO of DCG, is removed from his position as chief executive.
