Digital Currency Group (DCG) is a data encryption group company, which has the borrower Genesis Trading and the investment management company Grayscale. The group company made it clear today that it had stopped its asset management department, HQ Digital, which added to the new concerns of the BTC and data encryption industries, because the company managed a total of $3.5 billion in assets in December.

According to a notepad obtained by The Information, HQ Digital was shut down due to "the overall economic environment and the continuous data encryption in winter, which adds a very big disadvantage to the field". The enterprise may reconsider this project in the future. This is also the DCG branch established last year.

It is reported that the enterprise's partners ignored this determination. It is noteworthy that this information appeared on the same day that DCG announced the large-scale layoffs of Genesis Trading, which accounted for 30% of its employees.

It is noteworthy that, according to the report, the shutdown occurred as early as January 2. At the end of last year, a lot of altcoin held by Barry Silbert's enterprises were sold and the price fell.

This has led to more shocks, and there are rumors that DCGCEO Barry Silbert may sell its property to the market. Therefore, today's news may express the collapse of the Ether tradition, Filecoin, ZEN and NEAR in the middle and late December.

The BTC market is more anxious about DCG's failure

At this stage, this information may cause further anxiety in the data encryption cell, and aggravate the anxiety that DCG and Grayscale are likely to fail. However, this measure is likely to be clear only when Barry Silbert launched the restructuring of DCG at the end of last year.

In addition, Barry Silbert's body pressure increased again. Cameron Winklevoss, the founder of Gemini, released a proposal earlier this week, reprimanding Sedabert for dragging time, and demanding her to return $900 million to Gemini to obtain customer assets for his January 8 deadline.

In addition, Valkyrie Investments recently made a clear proposal to DCG to become the sponsor and manager of Grayscale BTC Private Equity Fund (GBTC), and at the same time released an opportunity stock fund to use the discount of Grayscale Bitcoin Private Equity Fund. On the other hand, Fir Tree, an investment management company with a value of 3.5 billion dollars, has filed a lawsuit against DCG.

It is obvious that DCG is facing a liquidity shortage, which emerged after the collapse of FTX, driving Genesis to stop redemption and new loans. Tommy Shaughnessy, co-founder and joint director of Delphi Ventures, dissolved the DCG phenomenon as follows:

– DCG owed $2.025 billion
– Genesis is able to repay the loan of USD 1.675 billion
– Genesis owes Gemini $900 million

DCG liquid

– Grayscale value of AUD10 billion AUM x 2%=AUD2 billion x 3 times magnification=AUD 600 million
– GBTC/ETHE Holdings=9.7%/3.8%=629 million US dollars (including discounts), with a face price of 11.7 billion US dollars
– VC book=Bear fire value

Possible solutions for DCG

As Shaughnessy explained, if Grayscale is sold, it is likely to raise $600 million to $800 million by 3-4 times. However, the future expenditure is under pressure. Reg M is required to reduce to close the discount due to the lawsuit.

DCG's Grayscale position is likely to generate $1.17 billion for the company's development. On the one hand, DCG can also sell its grayscale BTC Private Equity Fund (GBTC) and ETHE in open market operations, which are worth 629 million dollars at this stage. However, Shaughnessy further explained that DCG suffered a "crazy decline, so it is also called a 25% haircut or 471 million dollars"; "If you relax your trust, the sales market will also be attacked by nuclear weapons. According to the nominal price, you can get 1.2 billion US dollars, maybe 900 million US dollars, and the nuclear bombs will be reduced by 25%."

However, the latter of the two choices will make the sale of Grayscale more and more unlikely. According to the founder of Delphi Ventures, there are two key choices:

1/Grayscale sold, GBTC/ETHE position sold=US $600 million, US $471 million=US $171 million

2/Relax the gray value (if relaxed, it will not be sold), and take back the property at the face value or $900 million.

Neither of these options could produce the required $2.05 billion. How will the rest be obtained? According to Shaughnessy, this may come from Hilbert or DCG risk guidelines:

Maybe Barry, but considering the risk, I may not apply here. It may be a DCG risk book, but it is skeptical of the hot selling price in the bear market of the stock market.

This is a very big vacancy. I think it will be very messy and long. Gemini can fill the gap between the funds they get from Genesis (DCG) and his shares or personal holdings.

As of the time of submission, the market price of Bitcoin was US $16783, which still shows the fluctuation of historical bottom.

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