Cryptocurrency exchange Bitvavo, a major creditor to troubled crypto firm Digital Currency Group (DCG), has rejected DCG’s proposal for a partial debt repayment.
Bitvavo officially announced on January 11 that the company had received a counter-offer from DCG offering to pay back approximately 70% of the amount owed in a term acceptable to Bitvavo.
The exchange said the amount of the remaining balance is still under negotiation with DCG, as it is only willing to repay part of the debt within a period acceptable to Bitvavo, adding:
“As creditors, we do not find the latter option acceptable as DCG has sufficient resources available for full payment.”
Bitvavo has confirmed that the current situation regarding DCG has no impact on Bitvavo’s clients, platform or services. The company noted that “Bitvavo guaranteed the amount owed and thus assumed the risk from its customers.”
The announcement came after Bitvavo decided to pre-finance about $290 million in assets seized on DCG to avoid dependence on the ailing company. The Dutch cryptocurrency exchange said it has enough resources to continue serving its clients without interruption. The exchange expects DCG to refund the outstanding balances, even though the latter is experiencing a massive liquidity crunch amid the bear market.
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In a recent statement, Bitvavo mentioned a similar situation faced by the Winklevoss brothers’ crypto exchange, Gemini. On January 10, Cameron Winklevoss wrote a public letter to DCG’s board of directors, accusing CEO Barry Silbert of fraud and calling for Silbert’s replacement as CEO. With DCG and its cryptocurrency lending subsidiary Genesis Capital owe Gemini $900 million, the Gemini founders are confident that there is still potential for a positive resolution that satisfies all parties involved.
“Like Gemini, we share confidence that a solution that satisfies everyone involved can be found,” Pitavo noted.
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DCG and Genesis are among the major cryptocurrency industry companies affected by the massive contagion that followed the collapse of cryptocurrency exchange FTX in November 2022. The situation became even more serious for DCG after the US Department of Justice launched an investigation against the company in collaboration. With the Securities and Exchange Commission.
On Jan. 10, DCG’s Silbert wrote a public letter to shareholders defending his decisions and providing details of several loans from Genesis and relationships with companies like Three Arrows Capital.