An update on Bitvavo’s $280 million deal with Digital Currency Group

An update on Bitvavo's $280 million deal with Digital Currency Group

2022 is fast becoming a year to forget in the cryptocurrency industry. The misery began in May with the collapse of the Terra protocol, as more than $40 billion in assets vanished. Ultimately, this caused a chain reaction and several large companies ran into trouble, including Digital Currency Group, with which Dutch crypto exchange Bitvavo is closely linked.

what happened?

Cryptocurrency pool is used by Dutch Bitvavo to provide storage services. What this means is that Bitvavo redirects the money of its customers who want to take strikes directly to the Digital Currency Group, which then starts doing risky things with them so that the customers can get a return. In total this relates to €280 million, it remains to be seen if it will be returned to Bitvavo in full. For Bitvavo customers, there is nothing wrong at the moment.

On December 15th, I made Bitvavo a favour It takes over the entire debt thus compensating its customers. As a result, our clients are not affected by the problems that have arisen and can withdraw their funds at any time. The exchange said in a statement that Bitvavo now considers this a matter between Bitvavo and DCG Official response on the site.

After these issues, Bitvavo clearly has doubts about the future of staking on the exchange. “In the first quarter of 2023, we will review our strike service. We will choose to completely stop offering off-chain staking services or still offer them, but we call it ‘earn lending’, away from on-chain staking services and put more emphasis on transparency and ease of use.” , writes stock exchange platform.

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sufficient reserves

in addition to He writes a stock exchange platform That there are enough reserves to absorb DCG’s €280m hit. “Bitvavo is financially sound, without long-term loans. Significant gains have been made in recent years; 173 million euros in 2021 and almost 250 million euros in total so far.” […] This capital can also be used to protect our customers from the consequences of problems that arise outside of Bitvavo,” writes Bitvavo.

Petavavo It expects DCG’s first batch in the first quarter of next year. “Schedules now are for full completion of the plan by mid-January and for the first batch in the first quarter […] We expect a second payment in the second half of next year and a final one by Q1 or Q2 2024, Bitvavo CEO Marc Neufelstein told Newsbit.

Overall, Bitvavo seems to have things under control, but 280 million euros is still a lot of money. However, for the time being, we will have to wait until there is more clarity and the first payments from DCG reach the Dutch exchange.

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