DCG suspends quarterly dividends amid Genesis crisis: report

DCG suspends quarterly dividends amid Genesis crisis: report

Barry Silbert's crypto conglomerate, Digital Currency Group (DCG), announced that it is halting quarterly dividends until further notice.

In an email to shareholders seen by Bloomberg, the crypto investment firm said it is currently focused on "reducing operating costs and maintaining liquidity" in response to the current market environment.

Problems for DCG

The collapse of FTX exposed significant irregularities within Barry Silbert's empire, with DCG coming under intense scrutiny. The venture capital firm owns several subsidiaries, including the world's largest digital asset manager Grayscale, institutional lending firm Genesis and advisory firm Foundry.

Due to the financial distress, Genesis was forced to pause new loan originations and repayments - a move that directly impacted the Gemini Earn program. This subsequently escalated the fight with the crypto exchange's co-founder Cameron Winklevoss, who accused DCG of misrepresentation and accounting fraud and called for Silbert's resignation.

It was previously reported that Genesis owes users of Winklevoss' high-yield savings product Gemini Earn $900 million. DCG and Gemini previously assured investors that the two companies were trying to find a solution.

SEC Targets “Gemini Earn” Program

While the fate of customer funds stuck in the Gemini Earn program remained in limbo, the dispute between the two executives caused Gemini to terminate its master credit agreement with Genesis, "officially" ending the program. This step requires Genesis to return outstanding assets.

A day later, the US Securities and Exchange Commission (SEC) sued the two crypto firms for allegedly offering and selling unregistered securities to investors through the program. SEC Chairman Gary Gensler stated:

"Today's charges build on previous actions to make clear to the market and investing public that crypto lending platforms and other intermediaries must comply with our time-tested securities laws. This best protects investors. It promotes confidence in the markets. It is not optional. It is the law."

In total, Genesis is currently swimming in a staggering $3 billion in debt, and in order to pay off some of its debt, DCG wanted to sell the crypto broker's venture capital portfolios. Therefore, a global investment bank based in New York - Moelis - was hired to explore options to cover part of Genesis' debt crisis. However, talks of a fresh capital injection into the crypto lender appear to be off the table.

.