Why might grayscale be next in line after FTX crash?

Will Clemente, co-founder of cryptanalysis firm Reflexivity Research, in a chirping on December 17 revealed that cryptocurrencies related to Barry Silbert’s Digital Currency Group saw massive selling over the past 24 hours. The cryptocurrencies include Filecoin, Flow, Stacks, Livepeer, Ethereum Classic, Decentraland and others. Are Genesis and shades of gray in trouble?

Bitvavo Custody BV, part of Dutch cryptocurrency exchange Bitvavo, revealed in a blog that it is having trouble accessing its €280 million allocated to DCG. It said DCG and its affiliates are currently experiencing liquidity problems and have suspended repayments until further notice.


Are DCG’s Grayscale and Genesis on the brink of insolvency?

Andrew Parish, co-founder of ArchPublic, shared that Genesis creditor claims are beginning to sell in small lots “in what can be described as a ‘black market.’ He reported that two transactions worth $15 million closed at 35% of the pre-withdrawal suspension value.

Commenting on data shared by Andrew Parish, Adam Cochran noted that if accurate, it could be the early stage of DCG insolvency. Genesis and Alameda had bad loans and intertwined crypto borrower-lender relationships. FTX and Alameda bankruptcy could risk Genesis liquidation and could lead to bankruptcy of parent company Digital Currency Group (DCG).

DCG’s $1.1 billion promissory note to Genesis could prompt the parent group to dissolve Grayscale’s GBTC and EETH. This actually risks insolvency for Grayscale. According to data from Coinglass, GBTC trades at a discount premium of -48.79% and EETH at a discount premium of -52.58%. In fact, Grayscale’s Ethereum Classic fund ETHC is trading at a discount of over -70%.

Crypto market sale

Bitcoin price is trading at $16,729, down over 4% in the last 24 hours. Ethereum price fell 8%, with today’s rate at $1,181.

DCG Associated Cryptocurrencies
DCG Associated Cryptocurrencies

Cryptocurrencies related to Barry Silbert’s Digital Currency Group such as Filecoin, Mask, Flow and Ethereum Classic are down 26%, 16%, 16% and 12% respectively. Genesis’ lending business Genesis Capital is already considered insolvent by many experts. Neither Barry Silbert nor DCG and Genesis have issued statements to remove FUD.

Also Read: Crypto Market Tanks 6%, Bitcoin Slips Below $17,000

Varinder is a technical writer and editor, technology enthusiast and analytical thinker. Fascinated by Disruptive Technologies, he has shared his knowledge of Blockchain, Cryptocurrencies, Artificial Intelligence and the Internet of Things. He has been associated with the blockchain and cryptocurrency industry for a significant period of time and currently covers all the latest updates and developments in the crypto industry.

The content presented may include the author’s personal opinion and is subject to market conditions. Do market research before investing in cryptocurrencies. The author or publication has no responsibility for your personal financial loss.

Leave a Reply

Your email address will not be published. Required fields are marked *