Bitvavo to prefund locked DCG assets worth $296.7M amid liquidity crisis

Digital Currency Group and its affiliates (DCG), which manages $296.7 million (280 million) in deposits and digital assets on Bitvavo, a cryptocurrency exchange for off-chain staking services, are in a bear market. Suspended payments due to liquidity issues. However, Bitvavo has announced that it will pre-fund locked assets to prevent DCG from disrupting its users.

A severe liquidity crisis could loom over exchanges as users actively consider self-custody options as a way to protect their funds. DCG cited liquidity issues as it temporarily suspended repayments and temporarily stopped users from withdrawing funds. Bitvavo, on the other hand, has decided to pre-fund locked assets to ensure that users are not exposed to his DCG’s liquidity issues.

“DCG’s current situation will not affect the Bitvavo platform,” he said. publication Because the company guarantees uninterrupted service to its users. According to Bitvavo, DCG will share plans to refund outstanding deposits.

Furthermore, Bitvavo claims that DCG’s debt will not adversely affect its day-to-day operations, as DCG has been “profitable since its inception and is in a strong financial position.” Even if DCG failed to hold on to its end of the deal, the company made the status quo even more reassuring.

Bitvavo manages approximately $1.7 billion (1.6 billion) of deposits and digital assets, which are held on a one-to-one basis and fully redeemable by users.

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Binance, the cryptocurrency exchange with the highest trading volume, has suffered from a drop in liquidity due to a massive outflow of funds from the exchange.

Binance Netflow 7D ($) -3,660,311,347

8,783,380,428 – outflow
5,123,069,081 – Inflow

Exchange Flow Dashboard https://t.co/CYrBQLryQ0 pic.twitter.com/vV6vcqoWKK

Nansen (@nansen_ai) December 13, 2022

According to Nansen technologist Andrew Thurman, the drop in liquidity could be partly due to the withdrawal of large market makers from the exchange.