Digital Currency Group and its affiliates (DCG) have raised liquidity concerns by suspending redemptions and temporarily preventing users from withdrawing their funds.
Digital Currency Group and its subsidiaries (DCG), which manages $296.7 million in deposits and digital assets from crypto exchange Bitvavo for off-chain staking services, have amid redemptions citing liquidity issues exposed to the bear market. However, Bitvavo announced pre-funding of locked assets, preventing DCG-induced service disruptions for users.

As users proactively explore self-custody options to protect their funds, exchanges face an acute liquidity crisis. DCG cited liquidity issues as it suspended refunds and temporarily prevented users from withdrawing their funds. Bitvavo, on the other hand, has decided to pre-fund locked assets to ensure none of its users face DCG liquidity issues.

“The current situation at DCG has no impact on the Bitvavo platform,” reads the announcement, as the company does not guarantee its users any service interruptions. According to Bitvavo, DCG intends to share an ongoing deposit refund plan over time.

Additionally, Bitvavo claims that DCG’s debt will not negatively impact day-to-day operations as the company has been “profitable since inception and is in a strong financial position.” The company continued to calm the status quo even though DCG failed to keep its end of the bargain.

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Bitvavo manages nearly $1.7 billion in deposits and digital assets that can be held 1:1 and fully redeemed by users.

Related: Bitcoin Takes Liquidity Near $17,000 as US Dollar Shows Weakness Pre-CPI

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

According to Nansen tech Andrew Thurman, part of the drop in liquidity may have been caused by major market makers exiting the exchange.

Source: CoinTelegraph