Genesis/DCG: All Cool Again? Bitcoin Investors Should Be Cautious

Jake Simmons

1 year ago

3 mins read

Cardano (ADA) Becomes The Latest Addition To Grayscale Digital Large Cap Fund

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The Bitcoin price plunged to a new bear market low at $15,487 on Monday after rumors intensified that Genesis Trading and Digital Currency Group (DCG), which also owns Grayscale with its 635,000 BTC strong GBTC, would go bankrupt.

Since then, the Bitcoin price is recording a relief rally. At press time, Bitcoin was trading at $16.598 and faced the crucial resistance zone at $16,000. If this resistance is overcome, a quick candle towards $17,500 to $18,000 could be on the table.

Bitcoin rally ahead of DCG announcement? — Bitcoin price, 1-hour-chart. Source: TradingView

DCG/Genesis Safe?

Bitcoin investors, however, might be asking themselves what has changed in the whole misery surrounding Genesis / DCG and Grayscale?

DCG CEO Barry Silbert released a putative letter to investors yesterday. In it, the CEO explained that while DCG owes $575 million to its own trading arm, Genesis Trading, it is not due until May 2023.

Silbert also emphasized that DCG will have revenues of $800 million in 2022. While this represents a decline of about 20% from the previous year, Silbert said that revenues should still be sufficient to pay Genesis.

Further, the DCG CEO also confirmed the the company owes Genesis $1.1 billion on a promissory note that matures in June 2032 and is related to the Three Arrows Capital default.

“Genesis leadership and their board decided to hire financial and legal advisors, and the firm is exploring all possible options amidst the fallout from the implosion of FTX,” Silbert affirmed in his letter, adding that “we will let you know if we decide to do a financing round.”

The letter seems to have calmed the market. However, Crypto-Twitter is still puzzling over possible scenarios around how DCG can overcome its precarious financial situation. One of the main sources of rumors in recent days Andrew Parish, co-founder of ArchPublic, continues to claim an internal, anonymous sources.

VC/Attorney that has seen @DCGco data room per cap raise:

“Current valuations are way off, liabilities dwarf assets… nearly impossible to not see a DCG bankruptcy shortly after Genesis.”

— Andrew (@AP_Abacus) November 22, 2022

Parish accuses DCG of bluffing and claims that Silbert’s note was not sent to investors. He claims to have heard from several investors and creditors of DCG and Genesis:

This wasn’t sent to us first, we didn’t see it until it was posted online/twitter.

It’s all optics to soften a Genesis bankruptcy for DCG… and lawsuits that will follow.

An All-Good Solution?

Parish also dismissed Messari co-founder Ryan Selkis’ supposed “solution”. Selkis suggested that some of the Genesis creditors could convert their claims into DCG preferred or debt and warrants (“the Buffett-Goldman deal”), “potentially led by a reputable debt or growth fund”.

There’s a lot of things that led to this mess, but the current situation seems salvageable. I have no stake in this directly, just want to see a good resolution, and there’s not much time.

Parish countered that DCG and Genesis “have yet to have any meaningful dialogue with Genesis creditors,” as he was told by supposedly major investors.

So what’s the deal? No one knows at this time, except presumably DCG CEO Barry Silbert! Stay safe.

Jake Simmons

Jake Simmons, a dedicated crypto journalist, has been passionate about Bitcoin since 2016 when he first learned about it. Through his extensive work with NewsBTC.com and Bitcoinist.com, Jake has become a trusted voice in the crypto community, guiding newcomers and seasoned enthusiasts alike towards a deeper understanding of this dynamic field.

His mission is simple yet profound: to demystify Bitcoin and cryptocurrencies and make them accessible to everyone.
With a professional career in the Bitcoin and crypto scene that began right after graduating with a degree in Information Systems in 2017, Jake has immersed himself in the industry. Jake joined the NewsBTC Group in late 2022. His educational background provides him with the technical prowess and analytical skills necessary to dissect complex topics and present them in an understandable format. Whether you are a casual reader curious about Bitcoin or an investor seeking to navigate the latest market trends, Jake’s insights offer valuable perspectives that bridge the gap between complex technology and everyday usage.

Jake is not just a reporter on technological trends; he is a firm believer in the transformative potential of Bitcoin over traditional fiat currencies. To him, the current financial system is on the brink of chaos, propelled by unchecked government actions and flawed Keynesian economic policies. Drawing from the principles of the Austrian school of economics, Jake views Bitcoin not merely as a digital asset but as a crucial step towards rectifying a failing monetary system. His libertarian views reinforce his stance that just as the church was separated from the state, so too should money be freed from governmental control.

For Jake, Bitcoin represents more than just an investment; it's a peaceful revolution. He envisions a future where Bitcoin fosters a sustainable and responsible financial framework for generations to come. His advocacy is not about opposition but about evolution, about laying the groundwork for a system that prioritizes transparency and equity over secrecy and inequality.

As a journalist, Jake’s articles are crafted with the precision of a scholar and the passion of a true believer. He provides not only news but also thoughtful analysis that connects the dots between daily developments and larger economic theories. His work is a beacon for those lost in the technical jargon often associated with crypto discussions, illuminating the practical implications and benefits of these technologies.

In summary, Jake Simmons is not just reporting on a revolution; he wants to be part of it, fully committed to enhancing public understanding and adoption of Bitcoin and cryptocurrencies. His work is more than just a collection of articles; it’s a resource, a guide, and a companion for anyone ready to explore the potential of this digital frontier. Whether you are taking your first steps into crypto or are a veteran looking to stay on top of the latest trends, Jake’s insights provide clarity and foresight in an often unpredictable industry. Join him on this journey to reshape the world of finance, one post at a time.

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