Barry Silbert’s Digital Currency Group (DCG) has suspended shareholder payouts as it struggles to ride out a “wave of unprecedented fraud and criminal behavior” plaguing the industry.
As reported by CoinDesk, in a letter to shareholders on Tuesday, Silbert explained that the company was “focused on strengthening our balance sheet by reducing operating expenses and preserving liquidity.”
As such, he continued, the firm’s quarterly shareholder dividend distribution will be halted “until further notice.”
The challenging conditions currently facing DCG have, according to Silbert, been brought about in part by what he calls “a wave of unprecedented fraud and criminal behavior, unlike anything I’ve seen in my career,” (our emphasis).
As such, he warns, the industry has a lot of hard work to do to re-establish its credibility and reputation, which have been all but destroyed.
Is Silbert himself to blame for DCG dividend freeze?
The problems facing DCG have been exacerbated by issues with its affiliate Genesis in the wake of the collapse of crypto exchange FTX in November.
Protos reported in December that Genesis Trading and DCG owed over $900 million to the Winklevoss twins’ Gemini Earn, as the contagion from FTX’s implosion continued to spread.
The company has also had to contend with the loss of senior advisor Larry Summers. Former Harvard professor Summers had worked for DCG since 2016 but, as reported by Protos earlier this month, he is reported to have cut ties with the conglomerate “several months ago.”
The exact circumstances of his departure are unknown but he previously drew criticism for his comments on FTX that saw him compare the exchange to ENRON.
It’s also been claimed that at least some of the firm’s problems have been caused by Silbert himself, specifically his management approach.
International Business Times reports that Digital Assets Data founder Mike Alfred said:
“The organization got so big. It was almost like a victim of its own success. Barry was no longer able to manage the risk management himself at every subsidiary.”
For his part, however, Silbert states in the letter that he believes, “DCG will emerge from this year a stronger company than ever before,” (our emphasis).