Bitvavo claims that DCG has liquidity problems, exchange funds are unaffected

As the fallout from the FTX implosion continues to unfold across the pond, DCG Group is also said to be dealing with liquidity issues and has halted repayments “until liquidity issues are resolved.”

DCG Group, a “strategic investor” that leverages its connections to monetize the market for its clients, also offers services to third parties who can offer access to DCG’s network to retail investors.

Domino effect

Bitvavo – a crypto exchange platform based in the Netherlands – is one of the third parties currently subject to the suspension of refunds by DCG. Fortunately for Bitvavo’s customers, DCG’s issues will not affect Bitvavo customers, according to a spokesperson for the Dutch platform.

In a statement published on its blog, Bitvavo reassured anxious customers that despite business relations worth EUR 280 million with DCG Group, Bitvavo has been on the green ever since the platform was founded. All assets locked with DCG are refundable in the event a Bitvavo customer wishes to withdraw from an investment.

“The current situation at DCG has no impact on the Bitvavo platform. Bitvavo will continue to provide the services our customers expect from us. Bitvavo has been profitable since inception and is in a financially sound position. […] Bitvavo will step in to protect its customers. DCG’s debt will not create an obstacle for Bitvavo to fulfill this obligation.”

DCG exposure limited to experienced users

As a full reserve exchange and crypto depository, Bitvavo states that all customer funds are held by Bitvavo alone unless expressly instructed otherwise by the owner of the funds.

As a result, the assets that were bet off-chain with DCG Group were only invested with DCG once the customers were informed. Furthermore, off-chain staking is disabled by default on the Bitvavo platform, which means that customers must willingly enable the option before they can invest.

Unfortunately, the current market situation has also burdened Bitvavo – due to the current market conditions, Bitvavo has also announced that it will revise the stake rates offered to customers in 2023. Customers of the platform can withdraw their funds at any time, subject to the platform’s T&C, should the new stake rates become unattractive.

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