Although this feels like a lifetime ago, it is only two months since Genesis announced that it must introduce US $1 billion of working capital after the FTX and Alameda events. With the delay of several weeks, there is no solution, and the small details of the story become more and more publicized, which is related to the fraud accusation against Digital Currency Group (DCG) released by Cameron Winklevoss, co-founder and chief president of Gemini. Gemini is still diligent in taking back $900 million from Genesis, which is used to make profits for his Earn customers.

The difficulties of DCG and Genesis are still unsolved and will become more and more serious, which will cause serious harm to the special currency sales market. Due to the need for a large number of answers, various possible conclusions are not presented.

The biggest problem is what the Grayscale Bitcoin Trust (GBTC) will have and how its various problems should potentially harm the price of Bitcoin. GBTC has always been the best choice for many people to obtain the controlled bitcoin leverage ratio. In the previous ups and downs from equity premium to net asset value (NAV) discount, GBTC has been the seedbed of speculative arbitrage strategy. The Bitcoin spot trading ETF approved abroad is likely to overcome various problems, but we are still far from achieving this goal.

It is easy to start with GBTC stocks in DCG's balance sheet. It is estimated that GBTC stocks account for about 9.67% of the total supply. If DCG has to raise cash or step into Chapter 11 bankruptcy, selling such stocks is likely to be a choice. Selling to the already illiquid sales market can exert great pressure on the relatively low GBTC discount in history. DCG has about HK $670 billion of shares in a market with a daily turnover of less than HK $40 billion. However, a more important factor is that according to the legal requirements, DCG can sell no more than 1% of the outstanding share capital every quarter. It takes him about 2.5 years to sell all his shares.

The other way - the most likely way - is that GBTC and many trust companies in Grayscale find a new advertiser and manager together. Walkiri has clearly proposed to do this:

The new managers also have the opportunity to withdraw the investment of net asset value.

GBTC products are still the cash tree of Grayscale and DCG, with a permanent deduction of 2% of the management fee. In most of the most important trust products, Grayscale earned more than US $300 million from management fees alone this year. If there is no foreign Bitcoin swap ETF in the market, many customers will want to take over the management authority of the car, and do not liquidate all trusts under the worst conditions.

However, liquidation is not a non-zero probability. In the case of bankruptcy or bankruptcy of Grayscale, unless 50% of the equity network votes to sell to a new loan guarantor, it can carry out self-liquidation. DCG Clearing Trust is very helpful, and their individual shares can earn money close to the net asset value, but this may lead to the sale of Bitcoin in the open market operation. No one expects 632000 Bitcoin (about 3.3% of the current supply) to become the pressure of market sales. In the unlikely case, all the liquidation of the trust will be returned to the shareholders of the company in US dollars. It can be assumed that most of the sales will be absorbed through OTC transactions with interested investors. At this point, this is an assumption.

New data has been exposed, which may change the overall development of people between Grayscale and Grayscale commodity company shareholders. We will again prepare the trend of the situation in the coming weeks.

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