According to a shareholder letter from Digital Currency Group (DCG) seen by financial and crypto publication Coindesk, the company has suspended its dividend until further notice. The news comes after the U.S. Securities and Exchange Commission (SEC) charged DCG’s subsidiary, Genesis Global Capital, with operating an “unregistered offering and sale of securities to retail investors.”
Digital Currency Group Suspends Dividends Dividends to Strengthen Balance Sheet
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On January 17, 2023, Coindesk reporter Ian Allison reported that Digital Currency Group (DCG) is for the time being disclosing that it has suspendedthe article. It is worth noting that Coindesk, a news outlet specializing in financial crypto, is an “independent operating subsidiary” of DCG. Allison’s report cites a shareholder letter confirmed by the publication, noting that the decision is in response to “current market conditions.”
DCG has been “focused on strengthening its balance sheet by reducing operating expenses and providing liquidity. As such, we have decided to suspend the distribution of DCG’s quarterly dividend until further notice.” He adds.
Coindesk’s article follows the issues that Genesis Global Capital, DCG’s crypto lending subsidiary, has been dealing with over the past two months: on November 16, 2022, Genesis’ lending arm suspended withdrawals and new loan originations. Subsequently, it was reported that Genesis owed $900 million to Gemini Earn customers, and as a result, Gemini also suspended withdrawals and recently suspended its Earn program. In addition, it was reported in detail that Genesis was under investigation by U.S. regulators, and Gemini formed a committee with Houlihan Lokey to resolve Genesis’s liquidity issues.
Subsequently, Gemini co-founder Cameron Winklevoss wrote an open letter critical of the matter and also submitted an open letter arguing that DCG’s board remove Barry Silbert from his role as CEO of DCG. In response, Silbert wrote a letter to DCG shareholders in which he denied many of Winklevoss’ claims. The next day, both Gemini and Genesis were charged by the SEC with conducting an unregistered offering.
DCG owns a vast portfolio of crypto companies, including Coindesk, Foundry USA, Grayscale Investments, and Genesis Global Capital. All of these companies are major players in the field; for example, Foundry USA is thelargest bitcoin mining pool in terms of hash ratesand Grayscale manages thelargest bitcoin trust in the crypto industry(GBTC).
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