Bitvavo, a Dutch cryptocurrency exchange, has announced its 280 million euros are locked in Digital Currency Group, Reuters reports. The trading platform reassured it has enough funds to operate but still needs the locked-out funds back.
Digital Currency Group seems to be in a financial crisis as it is currently in liquidity and struggles to balance its finances following the FTX crash.
The main cause of this downturn is because of the crypto lending platform Genesis which experienced the shock waves of FTX insolvency and is struggling to pay back its creditors, including the Gemini exchange after Sam Bankman-Fried failed to meet the payment obligations.
DCG now seems to be facing insolvency as Bitvavo reported their funds were locked in the company for the off-chain staking. This money was given to DCG for an interest-earning product, which could profit its customers from depositing crypto tokens.
Bitvavo assured its customers that it can still actively withdraw and deposit funds as it can “prefund any locked assets at DCG” but there’s still a concern over the locked amount.
“Bitvavo is in active discussions with DCG, along with other DCG business customers. It is expected that the outstanding deposits will be repaid by DCG in due course,” the exchange said.