Crypto trading firm Genesis’ exposure to bankrupt crypto firms FTX and Three Arrows Capital is pulling its parent Digital Currency Group (DCG) and Grayscale into the contagion. Now, it has come to light that Barry Silbert’s DCG owes over $1.1 billion to Genesis. Some claim DCG fallout could have more ripple effects than FTX.
DCG Owes Over Billion To Genesis
Andrew Parish, co-founder of ArchPublic, in a on November 21 claimed that Barry Silbert’s DCG owes $1.1 billion to Genesis via a previously undisclosed promissory note hidden from potential investors. He believes hidden funds are the primary reason behind DCG and Genesis seeking $1 billion in emergency funding from investors.
now we know why DCG is doing a $1B raise, and is getting rebuffed. Grayscale assets are the only assets receiving any meaningful interest. If Genesis dies, so does DCG (DCG actually owes Genesis more than the $1.1B but have been asked not to disclose yet).”
Genesis needs a $1 billion capital injection by today in order to prevent the contagion spread to DCG and Grayscale. DCG has already provided $140 million to Genesis after it disclosed nearly $175 million locked in an FTX trading account. However, it wasn’t enough and forced Genesis to pause redemptions, withdrawals, and new loan originations.
DCG also bailout Genesis from Three Arrows Capital exposure worth $1.2 billion in July. Some believe failing to raise capital may force DCG and Grayscale to dissolve GBTC and ETHE trusts, which are already trading at over 40% discount. This could have more impact than FTX fallout.
Meanwhile, Grayscale denied disclosing its proof of reserves citing security concerns. Investors were disappointed with the decision to keep reserve details confidential amid the FTX crisis and uncertainty surrounding Genesis. Moreover, Grayscale Bitcoin Trust Fund (GBTC)’s premium rate has now fallen to a whopping -45.2%.
Crypto Market Drags Lower
The crypto market continues to fall amid the FTX crisis and its contagion spread to other crypto exchanges and companies. Bitcoin and Ethereum prices fell over 4% and 8% in the last 24 hours.
Bitcoin and Ethereum prices are currently trading at $16,118 and $1,129. Crypto influencers have their eyes set on Genesis today, any information will be crucial for the industry.
- Genesis
- Grayscale Bitcoin Trust
