Skip to content

Digital Currency Group and its affiliates (DCG), which manages $296.7 million (€280 million) of crypto exchange Bitvavo’s deposits and digital assets for off-chain services, have suspended redemptions, citing liquidity issues bearish. in the market. However, Bitvavo announced a prepayment of locked assets, preventing a DCG-induced service outage for users.

As users actively explore self-storage options as a way to protect their funds, an acute liquidity crunch is expected to emerge on exchanges. DCG cited liquidity issues as it halted redemptions, temporarily stopping users from withdrawing their funds. Bitvavo, on the other hand, has decided to prepay locked assets to ensure that none of its users are exposed to DCG liquidity issues.

“The current situation at DCG has no impact on the Bitvavo platform,” the statement said, as the company ensures that service to its users will not be disrupted. According to Bitvavo, DCG intends to share a plan to repay outstanding deposits over time.

Furthermore, Bitvavo claims that DCG’s debt will not adversely affect its day-to-day operations as the company has “been profitable since its inception and is in a strong financial position”. The company later assured the status quo even if DCG failed to keep its end of the deal.

Bitvavo manages about $1.7 billion (€1.6 billion) in deposits and digital assets held at a 1:1 ratio and fully redeemed by users.

Related to: Bitcoin takes liquidity near $17k as USD shows weakness ahead of CPI

Due to the massive outflow of funds from the exchanges, Binance, the highest traded crypto exchange, suffered from a drop in liquidity.

According to Nansen technician Andrew Thurman, the drop in liquidity may be partly due to large market makers exiting the exchange.