Here’s Why Genesis Owner DCG, is Suspending Dividend Payouts

Digital Currency Group (DCG), a leading cryptocurrency investment firm, has discontinued its quarterly dividend payments in an effort to preserve cash and strengthen its balance sheet. The move comes amid a turbulent time for the crypto industry, which has been rocked by a series of high-profile collapses, including that of the U.S.-based crypto exchange FTX.

In a letter to shareholders, DCG said that it has been “focused on strengthening our balance sheet by reducing operating expenses and preserving liquidity.” The company added that it has made the “decision to suspend DCG’s quarterly dividend distribution until further notice.”

DCG’s financial troubles have been compounded by its exposure to the now-defunct crypto hedge fund Three Arrows Capital (3AC). In November, Genesis, DCG’s crypto broker, lent $2.36 billion of assets to 3AC. However, 3AC defaulted on its loans, leaving Genesis with a significant exposure.

As a result of Genesis’s woes, DCG has been working behind the scenes to try to find a solution. One option that has been floated is for DCG to sell a portion of its venture capital portfolio, which includes 200 crypto-related projects and is worth around $500 million. However, it is unclear if DCG will be able to find a buyer for its portfolio, given the current state of the crypto market.

The situation at DCG is a sign of the broader turmoil in the crypto industry. The recent collapse of FTX and other major players has shaken investor confidence, and the market is now in a state of flux. It remains to be seen how DCG will weather the storm, but the company’s financial troubles are a reminder that even the biggest players in the crypto industry are not immune to risk.

In addition to the financial problems, DCG is also facing a legal challenge from the Winklevoss twins, who are the co-founders of the cryptocurrency exchange Gemini. The Winklevoss twins have accused DCG and its CEO, Barry Silbert, of fraud, alleging that they misled investors about Genesis’s exposure to 3AC.

The legal battle between DCG and the Winklevoss twins is just one of the many challenges that the company is facing. It remains to be seen how DCG will overcome these challenges and emerge from the current crisis. However, the company’s future is uncertain, and it is clear that the crypto industry is still in a state of flux.