El conglomerado más grande de Crypto está en problemas

Crypto's largest company is in trouble digital currency group or dcg was recently sued by Gemini because its subsidiary owes the exchange over 1.2 billion dollars moreover Gemini is not the only entity the dcg conglomerate owes money to now this is a problem because another of dcg's subsidiaries holds almost 20 Billion dollars of Bitcoin if these debts aren't paid soon it could become a forced seller and not just of BTC so today I'm going to bring you up to speed on what's been going on with dcg explain why its financial position poses such a risk to the entire crypto market and Look at how it might solve its mounting problems let's start with a quick bit of background digital currency group was founded in 2015 by Barry silbert who continues to serve as the company's CEO all you need to know about Barry for the purposes of this video is that he has Experience in restructuring companies in the event of a bankruptcy as for dcg all you need to know is that it's arguably the biggest company in cryptocurrency at least when it comes to its reach dcg has invested in almost every single major crypto project and Company and has multiple subsidiaries Including crypto News company coindesk as a fun fact dcg also owns Foundry which is currently the largest Bitcoin mining pool by hash rate remember that for later now as far as subsidiaries go the only two that pertain to today's topics are grayscale and Genesis global trading which I'll simply refer to as Genesis Both companies were founded by Barry in 2013 and subsequently became subsidiaries of dcg when it was founded in 2015. as most of you will know grayscale is a digital asset management company that's famous for issuing the first BTC backed instrument on a centralized Stock Exchange this was the grayscale Bitcoin trust or Gbtc which began trading in August 2013. a decade later gbtc is backed by almost 20 billion dollars of Bitcoin if you've watched any of our videos about spot Bitcoin ETFs you'll know that gptc is very different in short shares in a spot Bitcoin ETF are issued and redeemed immediately to make sure they Track the value of BTC as closely as possible whereas gbtc shares take a lot longer to issue and redeem as a result gbtc shares have a harder time reflecting the value of the BTC that backs each share this means that gbtc can sometimes trade at a premium or at a Discount relative to the value of the BTC backing it gbtc has been trading at a discount since early 2021 and hit a record low late last year recently however gbtc has been trading closer to its fair value this is primarily because BlackRock recently filed for a spot Bitcoin ETF and grayscale sued the SEC to convert its Bitcoin trust into a spot Bitcoin ETF last summer blackrock's filing has led to hopes that the lawsuit will succeed grayscale CEO Michael sonnenshine revealed in an interview earlier this year that the asset manager expects the judge to rule on their case by the Autumn of this year meaning by October the outcome of this case could result in billions of dollars of BTC being dumped but I'll come back to that later the key thing to keep in mind about grayscale and especially gbtc is that its dcg's Golden Goose that's because grayscale charges management fees on all These trusts and when you're dealing with billions of dollars of assets the annual management fees are in the hundreds of Millions now as some of you will know Genesis was a digital asset service provider for institutional investors it provided a whole slew of crypto related services including crypto OTC trading and crypto Lending as always it's the leverage that eventually resulted in Genesis going bankrupt earlier this year if you watched our previous dcg update you'll note that Genesis lost a lot of money when Terror collapsed last spring that's because one of genesis's largest borrowers was crypto hedge fund three Arrows capital or 30C which went under along with Terror Genesis lost 2 billion dollars as a result fortunately or unfortunately the hole in genesis's balance sheet was only half as large it was only down around 1.2 billion dollars dcg was kind enough to give Genesis a promissory note worth 1.1 billion dollars giving Genesis 10 years to pay back the money with an ultra low one percent interest rate this kept Genesis solvent at least on paper until the Autumn when FTX collapsed after revealing exposure to FTX Genesis experienced a run Mass withdrawals and stopped withdrawals as a result this Created issues for Gemini which had a product called Gemini urn that allowed users to deposit their crypto to earn a yield behind the scenes the crypto deposited into Gemini earn was lent out to Genesis which would then do all sorts of things with it to make a profit Including lending it to crypto hedge funds like 3 AC logically Genesis stopping withdrawals meant that Gemini earn couldn't honor withdrawals forcing it to shutter initially Gemini's co-founders were cool-headed about the whole situation that's because there was hope that the exchange would recoup the roughly 1 billion dollars of crypto that Genesis Owed to Gemini earned users given that dcg was genesis's parent company there was an expectation that someone would pay up recall that Barry is an expert in restructuring companies on the brink of bankruptcy as the months dragged on however it became clear that Genesis wouldn't be Able to pay back its creditors even with dcg's help to clarify Genesis owed an additional 2 billion dollars to other creditors including dcg itself unable to pay its three billion dollars of debt it filed for bankruptcy in February but that didn't stop more creditors from crawling out of the woodwork in May the Bankruptcy estate for FTX reportedly wanted to claw back over four billion dollars from Genesis more recently it was reported that the bankruptcy estate for 3ac wanted to claw back one billion dollars from dcg by this point Gemini's co-founders had grown impatient particularly Cameron Winklevoss who began making public Statements about Genesis dcg and Berry it seems the aforementioned Trio managed to calm Cameron Dan by promising to pay Gemini half 630 million dollars while they tried to recoup the other half well dcg missed the deadline for that 630 million dollar payment it promised which was due in May this led to Speculation that dcg was on the brink of bankruptcy by July this month the winklevi Cameron and his twin brother Tyler had had enough Cameron published his last open letter to Barry a few days later Gemini sued dcg and Barry alleging fraud and demanding 1.5 billion dollars Now we don't have the time to go through the whole lawsuit in detail here but thankfully Cameron was kind enough to provide a short summary of the key points in a Twitter thread we'll leave a link to the full lawsuit in the description if you're someone who wants or needs the details Now in his thread Cameron revealed that Gemini was in the process of winding down Gemini earn in October due to perceived solvency issues with Genesis Barry allegedly reached out to Gemini to try and convince them to keep Gemini earned going despite allegedly knowing that Genesis was insolvent Barry claimed to them presumably the Winklevi that Genesis only faced a quote timing issue regarding its shortfall of funds following the collapse of 3ac Cameron explained that the official story about dcg rushing to plug genesis's 1.2 billion dollar hole is completely incorrect allegedly according to Cameron quote dcg didn't absorb any losses or provide real capital It just issued that 1.1 billion promissory note Gemini alleges that dcg Genesis and Barry created false Financial reports to give the impression that Genesis was solvent because of this promissory note One financial report allegedly noted the promissory note as a current asset and another allegedly noted the promissory note as a receivable both of which are allegedly false and Genesis allegedly didn't include the promissory note in its calculations of the duration of the loans it currently owes either Gemini alleges that Barry personally participated in perpetuating this fraud and makes the same allegations against another dcg executive although they Weren't sued in this case Gemini's evidence for this seems to be the fact that the fraud only worked if all three parties were coordinating with each other naturally dcg issued a public statement after the lawsuit was revealed according to crypto analyst Ram alawalia dcg is essentially claiming that the Allegations amount to defamation without providing any evidence to discredit Gemini's claims of course dcg claims that it did nothing wrong according to crypto analyst Adam Cochran the absence of any evidence to the country could be circumstantial evidence that some of Gemini's allegations are true regardless Adam believes that dcg's Main focus at the moment is to buy time and find some way to come up with the capital it needs one way of raising Capital could be to conduct another raise that is sell shares in dcg to investors and use that money to plug the hole there's just one problem and that's that It might not be enough indeed in our initial video about dcg last November we calculated that conducting arrays probably won't cut it back then we knew that this meant dcg would have to start selling assets at some point it seems that this selling started in February this year coincidentally around the time Genesis Went bankrupt according to the financial times dcg sold lots of shares in some of grayscale's largest trusts for reference dcg holds lots of shares in grayscale's trusts particularly gbtc this appears to be primarily due to the discount that these trusts started to experience in 2021 dcg reportedly Started buying these gbtc shares to try and bring them back up to par it's not clear how much dcg is spent on this it's also not clear how much of these trusts dcg currently owns now because dcg isn't a publicly traded company its financials are only periodically published Late last year dcg held around 600 million dollars in gbtc which was worth over 1 billion dollars BTC and is easily worth over 2 billion dollars today the aforementioned Financial Times article notes that most of dcg's grayscale trust sales have come from ethereum trust dcg offloaded a quarter Of its ethi Holdings raising a measly 22 million dollars it's likely that dcg has tried to avoid selling gbtc due to greyscale's plans to convert the trust into an ETF that said the recent rally in gbtc could be creating the perfect selling opportunity for dcg and it's Possible that it's been selling some of its gbtc into this rally again it's impossible to know for sure but it would be a logical move now dcg might also be selling lots of altcoins and shares in crypto companies that's because another Financial Times article from January noted that dcg was considering doing Just that back then these assets were worth around 500 million dollars it's possible that there worth more as a result of the rally we've seen this year moreover dcg has also reportedly been considering selling coindesk for 200 million dollars cardano founder Charles hoskinson is reportedly interested in Buying but said that the media company is overpriced Tron founder Justin sun is also interested in buying and has been a long time guest on the news site dcg hasn't just been selling assets either it's also been cutting costs in January it halted dividend payments to shareholders and laid off over 500 Employees in May it shut down its institutional trading subsidiary in June it asked judges to consolidate all of its lawsuits presumably to save on legal fees in addition to all of this dcg also managed to find an additional Revenue stream via one of its remaining subsidiaries in April Foundry started Charging fees for the first time since it was founded in 2019. now assuming the standard two percent fee Foundry has gotten around 0.5 percent of all the BTC mined since April because Foundry accounts for a quarter of bitcoin's hash rate and a quarter of two percent is 0.5 Percent now given that around 90 000 BTC have been mined since April this means that Foundry has received roughly 4 500 BTC worth roughly 140 million dollars at today's prices when you add this to the assets that dcg can sell and the expenses dcg has cut It's possible that it has the money to pay back its debts recall that dcg makes money from the management fees on grayscale's trusts too however this all assumes that dcg can and has sold all these assets at top dollar and that it hasn't incurred additional expenses because of its legal Troubles the former is highly unlikely and the latter is effectively impossible in any case it's ultimately dcg's gbtc Holdings that make or break this equation this brings us back to grayscale's lawsuit against the SEC to convert gbtc into a spot Bitcoin ETF as I mentioned earlier the judge presiding Over the case is expected to make a ruling by October obviously there are only two possible outcomes either the judge sides with grayscale or the judge sides with the SEC if the judge sides with grayscale then it means that its gbtc will be converted into a spot Bitcoin ETF Michael admitted In another interview that he doesn't know how quickly this would happen given that the case is unprecedented nobody has ever sued the SEC to convert a crypto trust into an ETF before the likelihood of the judge siding with grayscale likely depends on whether the SEC approves another spot Bitcoin ETF in The interim be it from BlackRock or another asset manager that's because if the SEC approves a spot Bitcoin ETF it won't really be able to argue that gbtc can't be converted into one two now some would say that this gives the SEC an incentive not to approve a spot Bitcoin ETF until its defeated grayscale in court but let's set that aside for a moment let's suppose that the judge allows the gbgc ETF conversion to proceed for whatever reason this would be bearish for BTC in the short term as explained by cointelegraph that's because all the parties that purchase Gbtc at a discount relative to its BTC backing can immediately cash it in at its full price this includes dcg which owes at least three billion dollars to creditors and whose Gbtc Holdings are backed by over two billion dollars worth of BTC in other words the moment that Gbtc is Converted into an ETF dcg and others who are holding Gbtc at a discount could sell billions of dollars worth of BTC at a profit this is unlikely if dcg can plug the hole in another way it's likely if the hole can't be plugged and it's guaranteed if dcg is bankrupt by then Because the gbdc and or BTC would be liquidated as part of the bankruptcy proceedings this ties into the second possibility if the judge decides with the SEC then that means gbtc won't be converted into a spot Bitcoin ETF the Practical effect of this is that the gbdc discount will Immediately increase possibly to a new record low this would significantly devalue dcg's gbtc shares this would be worse than you think because gbdc isn't very liquid in plain English there aren't that many buyers and sellers the recent hype notwithstanding this means that dcg would probably have to sell its Gbdc at an even bigger discount and the returns probably wouldn't be more than a billion like the gbtc to ETF conversion though this series of events wouldn't happen overnight as Michael explained in another interview depending on the details in the judge's ruling against grayscale it would immediately file an Appeal and take the case as far as the Supreme Court this could take years but again this depends on the details in the judge's ruling against grayscale Michael has mentioned on many occasions that if the digital asset manager doesn't see an opening for a potential appeal then they Will try a tender offer file with the SEC to buy back gptc at 20 of its value and liquidate the trust this gbdc buyback would cost greyscale billions of dollars chances are that grayscale doesn't have billions of dollars sitting around otherwise it would have given it to dcg This means grayscale would have to sell the BTC backing gbtc to buy back the gbtc and bail out dcg crashing BTC in the process dcg would lose its largest revenue stream in the process remember gbtc is its Golden Goose on that note there could be a third possibility and that's That one of the asset managers who filed for a spot Bitcoin ETF application offers to purchase gbtc from greyscale and dcg's gbtc holdings at par since June rumors have been circulating that Fidelity was considering buying gbtc in a recent episode of block Works Morgan Creek digital CEO Mark yesko Revealed that Fidelity's offer to dcg or grayscale was likely less than what Barry wanted Mark said that Barry should take the deal if it's still on the table that's because gbtc could crash if a different spot Bitcoin ETF is approved first that would put grayscale in the Same position as if it lost its case against the SEC something that Mark believes is highly likely however this presupposes that another spot Bitcoin ETF will be approved after grayscale has lost its case or dcg has gone bankrupt if it happens before it will be bullish for gbtc now given the circumstances Gbtc being acquired by an asset manager would be the ideal outcome at least for the crypto Market from our perspective anything else could result in the mass selling of assets be they BTC or altcoins the fact of the matter is that DC GG owes billions and it needs to get That money Pronto let's just hope it doesn't come from our crypto portfolios and that's all for today's video folks if you found it informative let me know by Smashing that like button if you want to make sure you keep getting informed subscribe to the channel and ping that Notification Bell if you want to help others stay informed share this video If you happen to be looking for a safe place to park your crypto or a cheaper place to trade it check out the coin Bureau deals page it's got the biggest discounts on the best hardware wallets And up to forty thousand dollars worth of bonuses and discounts on the best crypto exchanges the link is of course in the description thank you all so much for watching and I'll see you next time adios ciao goodbye