Liquidity issues at Digital Currency Group (DCG) have apparently reached a critical juncture, leading to the sale of its holdings in the Grayscale cryptocurrency trust. The cryptocurrency community has long speculated about the impact on the cryptocurrency market if DCG dumped Grayscale’s trust shares.
After DCG’s trading platform Genesis Trading filed for bankruptcy last month, the outside world noticed that the platform owed huge amounts of money to creditors. One of those creditors is the Winklevoss twins’ cryptocurrency exchange Gemini, which Genesis owes about $900 million primarily to customers of Gemini’s Earn product. This apparently sparked liquidity issues for Genesis parent company DCG, which is now selling Grayscale shares for a turnaround.
According to the British “Financial Times” report on Tuesday, DCG has submitted a document to the US Securities and Exchange Commission (SEC), showing that the company is selling a large number of shares that hold its own Grayscale.
According to the filing, DCG has sold about a quarter of its holdings in the Grayscale Ethereum Trust (ETHE), as well as holdings in various Grayscale cryptocurrency funds, including the Litecoin Fund ( Litecoin fund), Ethereum Classic Fund, etc.
It’s worth noting that DCG is reportedly selling these shares at around “50%” of their present value, including selling shares of the Ethereum Fund at $8 per share, compared to the actual price for the fund of Over $16.
DCG Chief Executive Barry Silbert justified the sale, saying it was “as part of a portfolio rebalancing effort.” This is the first time the company has sold shares in the ethereum fund since it sold some of its ether fund shares in 2021.
So far, DCG’s sale of its Grayscale holdings has had no impact on the overall cryptocurrency market, possibly because the company has apparently avoided selling any Grayscale Bitcoin Trust holdings. , GBTC) stocks.
GBTC is the largest bitcoin trust in the world, with over $14 billion under management and 3% of the total bitcoin supply. As of January this year, DCG held about 67 million GBTC shares, a large number that is bound to shock the market if DCG sells them. However, DCG still holds these GBTC stocks, which is still good news for Bitcoin, at least for now.
Despite this, the current trading levels of GBTC Grayscale Bitcoin Trust and ETHE Grayscale Ethereum Trust are still significantly below the net asset value (NAV), because investors cannot directly redeem the digital assets held in the trust. Grayscale, which is currently locked in a legal battle with the SEC, wants to convert the Bitcoin Trust into a spot Bitcoin ETF, which it believes will help narrow the huge discount.
As of writing, the GBTC Grayscale Bitcoin Trust has a 42.53% discount to the net asset value, and the ETHE Grayscale Ethereum Trust has a 51.11% discount to the net asset value.