Digital Currency Group Halts Dividend Payment to Conserve Cash - BLOOMBERG
BY David Pan and Vildana Hajric, Bloomberg News
(Bloomberg) -- Digital Currency Group, the struggling crypto empire whose Genesis Global Capital lending unit is trying to stave off bankruptcy, said it’s suspending quarterly dividends to preserve cash.
The move comes as the group focuses on “strengthening our balance sheet by reducing operating expenses and preserving liquidity,” according to a Jan. 17 letter to shareholders seen by Bloomberg News.
Barry Silbert’s DCG is a linchpin of the crypto industry but has been battered by a prolonged rout in digital assets and the fallout from the collapse of the FTX exchange. Genesis stopped reimbursements in November and has warned that it may file for bankruptcy if it can’t raise needed funds.
Silbert is locked in an escalating battle with Gemini crypto exchange co-founder Cameron Winklevoss, whose customers have lost access to $900 million of funds that were placed with Genesis. Creditors including Gemini have been working behind the scenes to try to find a solution to Genesis’s woes.
The digital-asset rout has forced a slew of companies into bankruptcy or deep retrenchments. DCG cut 10% of its staff in a restructuring last year.
The group’s sprawling business spans digital-asset fund manager Grayscale Investments LLC. The Grayscale Bitcoin Trust, the world’s largest crypto fund, has been trading at a steep discount to the amount of cryptocurrency it holds, leading vexed shareholders to call for changes.
Meanwhile, US authorities are digging into the internal financial dealings of DCG, according to people familiar with the matter.
Silbert has sought to allay concerns, saying in a letter this month that he has “no doubt that DCG will emerge from this year a stronger company than ever before.” His net worth, once estimated at $3 billion, is now below $1 billion, according to the Bloomberg Billionaires Index.
A spokesperson for DCG didn’t reply to a request for comment.
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--With assistance from Joanna Ossinger.
(Updates with context on DCG starting in third paragraph.)