Barry Silbert’s crypto conglomerate, Digital Currency Group (DCG), revealed halting quarterly dividends until further notice.

In an email to shareholders, as viewed by Bloomberg, the crypto investment firm said it is currently focused on “reducing operating expenses and preserving liquidity” in response to the current market environment.

Troubles for DCG

The FTX collapse exposed significant irregularities in Barry Silbert’s empire, with DCG at the receiving end of intense scrutiny. The venture capital firm owns several subsidiaries, including the world’s biggest digital asset manager, Grayscale, institutional lending company Genesis, and advisory company Foundry.

As a result of the financial distress, Genesis was forced to pause new loan originations and redemptions – a move that directly affected the Gemini Earn program. This subsequently escalated the battle with the co-founder of the crypto exchange, Cameron Winklevoss, who accused DCG of misrepresentation and accounting fraud and called for Silbert to step down.

It was earlier reported that Genesis owes users of Winklevoss’ high-yield savings product Gemini Earn $900 million. DCG and Gemini earlier assured investors that the two companies have been trying to find a solution.

SEC Targets ‘Gemini Earn’ Program

While the fate of the customer funds stuck in the Gemini Earn program continued to hang in limbo, the fallout between the two executives led Gemini to terminate its master loan agreement with Genesis, thereby “officially” ceasing the program. This move requires Genesis to return outstanding assets.

A day later, the US Securities and Exchange Commission (SEC) sued the two crypto firms for allegedly offering and selling unregistered securities to investors through the program. SEC Chair Gary Gensler stated,

“Today’s charges build on previous actions to make clear to the marketplace and the investing public that crypto lending platforms and other intermediaries need to comply with our time-tested securities laws. Doing so best protects investors. It promotes trust in markets. It’s not optional. It’s the law.”

Overall, Genesis is currently swimming in an astonishing debt of $3 billion, and in a bid to repay some of its debt, DCG was looking to sell off the crypto broker’s venture capital portfolios. As such, a New-York headquartered global investment bank – Moelis – was hired to explore options to cover part of Genesis’ debt crisis. However, talks of fresh capital injection into the crypto lender appear to be off the table.