The Digital Currency Group and its associates (DCG), which manages $296.7 million (280 million euros) in deposits and digital assets of crypto trade Bitvavo for off-chain staking companies, suspended repayments citing liquidity issues amid the bear market. However, Bitvavo introduced to prefund the locked assets, stopping DCG-induced service disruption for customers.
With customers proactively exploring self-custody choices as a way to safeguard their funds, an acute liquidity crisis is anticipated to loom over exchanges. DCG cited liquidity issues because it suspended repayments, briefly halting customers from withdrawing their funds. Bitvavo, however, determined to prefund the locked assets to be sure that none of its customers are uncovered to DCG liquidity points.
“The present scenario at DCG doesn’t have any influence on the Bitvavo platform,” learn the announcement as the corporate assured no service disruption to its customers. According to Bitvavo, DCG intends to share a plan for reimbursing the excellent deposits over time.
Moreover, Bitvavo maintains that DCG’s debt may have no detrimental influence on its day-to-day operations as the corporate “has been making a revenue since its inception and is in a financially stable place.” The firm additional reassured the established order even when DCG failed to preserve their finish of the cut price up.
Bitvavo manages almost $1.7 billion (1.6 billion euros) in deposits and digital assets, that are held 1:1 and totally redeemable by the customers.
Related: Bitcoin takes liquidity close to $17K as US greenback exhibits weak spot pre-CPI
Owing to the large outflow of funds from exchanges, Binance — the crypto trade with the best buying and selling quantity — suffered from a decline in liquidity.
Binance Netflow 7D ($) -3,660,311,347
8,783,380,428 – Outflow
5,123,069,081 – Inflow
Exchange Flows dashboard ⤵️https://t.co/CYrBQLryQ0 pic.twitter.com/vV6vcqoWKK
— Nansen (@nansen_ai) December 13, 2022
According to Nansen technician Andrew Thurman, the drop in liquidity could have been partially brought on by giant market makers exiting the trade.