The Digital Currency Group and its associates (DCG), which manages $296.7 million (280 million euros) in deposits and digital assets of crypto change 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 predicted to loom over exchanges. DCG cited liquidity issues because it suspended repayments, quickly halting customers from withdrawing their funds. Bitvavo, then again, determined to prefund the locked assets to be sure that none of its customers are uncovered to DCG liquidity points.
“The current situation at DCG does not have any impact 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 could have no detrimental affect on its day-to-day operations as the corporate “has been making a profit since its inception and is in a financially solid position.” The firm additional reassured the established order even when DCG failed to maintain their finish of the discount 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 $17K as US greenback reveals weak spot pre-CPI
Owing to the huge outflow of funds from exchanges, Binance — the crypto change with the very best buying and selling quantity — suffered from a decline in liquidity.
Binance Netflow 7D ($) -3,660,311,347
8,783,380,428 – Outflow5,123,069,081 – 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 change.