According to a Digital Currency Group (DCG) shareholder letter seen by crypto and finance publication Coindesk, the company has suspended dividends until further notice. This news follows the US Securities and Exchange Commission (SEC) accusing a subsidiary of DCG, Genesis Global Capital, of operating an “unregistered offering and sale of securities to retail investors.”
Digital currency group takes steps to strengthen balance sheet by suspending dividends
On January 17, 2023, Coindesk reporter Ian Allison posted a Article revealing that Digital Currency Group (DCG) is suspending dividend payments for the time being. It is worth noting that Coindesk, a crypto-focused financial news outlet, is an “independent operating subsidiary” of DCG. Allison’s report cites a shareholder letter reviewed by the publication, which notes that the decision was made in response to the “current market environment.”
DCG added that the company “has been focused on strengthening our balance sheet by reducing operating expenses and preserving liquidity; as such, we have made the decision to suspend DCG’s quarterly dividend distribution until further notice.”
The Coindesk article follows the issues that DCG’s crypto lending affiliate Genesis Global Capital has been facing over the past two months. On November 16, 2022, the Genesis lending unit suspended withdrawals and the origination of new loans. It was then reported that Genesis owes Gemini Earn clients $900 million and as a result, Gemini also stopped withdrawals and recently closed the Earn program. Additionally, reports detailed that US regulators were investigating Genesis, and Gemini formed a committee with Houlihan Lokey to resolve Genesis’s liquidity problems.
Gemini co-founder Cameron Winklevoss later wrote a critical open letter on the subject, later following up with another open letter insisting that DCG’s board of directors remove Barry Silbert from his role as CEO. from DCG. Silbert responded with a letter to DCG shareholders, in which he dismissed many of Winklevoss’s claims. The next day, both Gemini and Genesis were charged by the US Securities and Exchange Commission (SEC) for making an unregistered offering.
DCG owns a broad portfolio of crypto companies, including Coindesk, Foundry USA, Grayscale Investments, and Genesis Global Capital. All of these companies are major players in the space; For example, Foundry USA is the largest bitcoin mining pool in terms of hashrate, and Grayscale manages the higher trust of Bitcoin (GBTC) in the crypto industry.
What do you think about the suspension of dividends by Digital Currency Group? Let us know what you think about this topic in the comments section below.
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