• Press Releases
    • Submit a press release
    • Read All
  • Advertise
  • Contact us
Crypto.com Logo Crypto.com Logo
Bitcoinist.com
No Result
View All Result
  • Bitcoin
    • News
    • Price
    • Businesses
    • Acceptance
    • Technology
    • Investment
    • Regulation
    • Reviews
    • All Bitcoin News
  • Altcoins
    • News
    • Price
    • Ethereum
    • Ripple
    • Litecoin
    • EOS
    • NAGA
    • All Altcoin News
  • Tech
    • Blockchain
    • Security
    • FinTech
  • Industry
    • Industry News
    • Press Releases
  • Price
    • Bitcoin Price
    • Ethereum Price
    • Litecoin Price
    • Binance Coin Price
  • How to
    • Buy gift cards/mobile Top Ups with Cryptos
    • What Is Bitcoin?
    • Best Bitcoin Wallet
    • Bitcoin vs Ethereum
    • Why Use Blockchain Technology?
    • Bitcoin Cash ABC vs. Bitcoin Cash SV
    • How to Buy Cryptocurrency
    • Bitcoin Mining
    • Best Bitcoin Brokers
    • Best Bitcoin Forex Brokers
    • How To Earn Bitcoin
    • What is Facebook Libra?
    • Ripple and XRP: The Complete Guide
    • Bitcoin Casinos – Where, What and How to Play
  • Events
  • Play Games
  • Play Casino Games
  • Win 1 BTC
Breaking News: Crypto Exchange Binance To Launch Prepaid Card In This South American Country
  • Bitcoin
    • News
    • Price
    • Businesses
    • Acceptance
    • Technology
    • Investment
    • Regulation
    • Reviews
    • All Bitcoin News
  • Altcoins
    • News
    • Price
    • Ethereum
    • Ripple
    • Litecoin
    • EOS
    • NAGA
    • All Altcoin News
  • Tech
    • Blockchain
    • Security
    • FinTech
  • Industry
    • Industry News
    • Press Releases
  • Price
    • Bitcoin Price
    • Ethereum Price
    • Litecoin Price
    • Binance Coin Price
  • How to
    • Buy gift cards/mobile Top Ups with Cryptos
    • What Is Bitcoin?
    • Best Bitcoin Wallet
    • Bitcoin vs Ethereum
    • Why Use Blockchain Technology?
    • Bitcoin Cash ABC vs. Bitcoin Cash SV
    • How to Buy Cryptocurrency
    • Bitcoin Mining
    • Best Bitcoin Brokers
    • Best Bitcoin Forex Brokers
    • How To Earn Bitcoin
    • What is Facebook Libra?
    • Ripple and XRP: The Complete Guide
    • Bitcoin Casinos – Where, What and How to Play
  • Events
  • Play Games
  • Play Casino Games
  • Win 1 BTC
Bitcoinist.com
No Result
View All Result
Breaking News: Crypto Exchange Binance To Launch Prepaid Card In This South American Country
Luno Barry Silbert DCG final contagion for Bitcoin?
Advertisement

DCG Closes Subsidiary HQ Digital, Fueling Fears In Bitcoin Market

Jake Simmons by Jake Simmons
4 weeks ago
in Bitcoin
0
Advertisement

Digital Currency Group (DCG), the crypto conglomerate that owns lender Genesis Trading and asset manager Grayscale, among others, today made public that it has closed its asset management division called HQ Digital, fueling new fears within the bitcoin and crypto industry, given that the company managed $3.5 billion in total assets in December.

A memo obtained by The Information states that HQ Digital is being shut down due to the “general economic environment and the ongoing crypto winter, which is creating significant headwinds for the industry,” and that the company may revisit the project in the future. This is a DCG subsidiary that was formed just last year.

Don't wait! Jump on this Crypto Deal and get a 150% Welcome Bonus plus 100 Free Spins on your deposit today!

The company’s partners were reportedly blindsided by the decision. Remarkably, the news comes on the same day that DCG announced massive layoffs at Genesis Trading amounting to 30% of its employees.

Related Reading: Big Move Is Brewing For Bitcoin As Volatility Hits Historic Lows

It’s also worth noting that the shutdown took place as early as January 2, according to the report. Towards the end of last year, numerous altcoins owned in large quantities by Barry Silbert’s company saw a massive sell-off and price drops.

This caused a bigger stir and rumors that DCG CEO Barry Silbert might dump his assets on the market. Thus, today’s news may explain the crash of Ethereum Classic, Filecoin, ZEN, and NEAR in mid-December.

BitStarz Player Lands $2,459,124 Record Win! Could you be next big winner?
570% up to 12 BTC + 300 Free Spins for new players & 1 BTC in bonuses every day, only at Wild.io. Play Now!

Fears Over DCG Bankruptcy Grow In The Bitcoin Market

For now, the news is likely to cause further panic in the crypto community, fueling fears that DCG and Grayscale could go bust. However, the move may have to be seen in the context of a corporate restructuring of DCG that Barry Silbert kicked off late last year.

Meanwhile, the pressure on Barry Silbert continues to grow. Gemini founder Cameron Winklevoss released an open letter earlier this week accusing Silbert of stalling and giving him a January 8 deadline to return the $900 million in Gemini Earn customer funds.

Related Reading: SEC Says No To Binance’s Acquisition Of Voyager Digital Assets

In addition, Valkyrie Investments recently made DCG an offer to become the new sponsor and manager of Grayscale Bitcoin Trust (GBTC), while announcing the launch of an opportunistic fund to take advantage of Grayscale Bitcoin Trust discounts. The $3.5 billion asset manager Fir Tree, on the other hand, has filed a lawsuit against DCG.

Apparently, DCG is facing a liquidity shortage that was revealed after FTX collapsed, forcing Genesis to suspend redemptions and new loans. Tommy Shaughnessy, co-founder and co-lead of Delphi Ventures, broke down the DCG situation as follows:

– DCG Owes $2.025B
– Genesis can call their $1.675B loan
– Genesis owes $900M to Gemini

DCG Liq

– Grayscale $10B AUM x 2% = $200M x 3x multiple = $600M
– GBTC/ETHE Holdings = 9.7%/3.8% = $629M with discount, $1.17B at par
– VC book = Firesale values in a bear

Possible Solutions For DCG

As Shaughnessy explained, Grayscale could likely raise $600-800 million at a 3-4x multiple if sold. However, future fee generation is under pressure as there are lawsuits for Reg M relief to close the discount.

DCG’s Grayscale holdings could bring the company $1.17 billion. On the one hand, DCG can sell its Grayscale Bitcoin Trust (GBTC) and ETHE on the open market, currently worth $629 million. However, DCG faces “insane slippage so let’s call it 25% haircut or $471M,” Shaughnessy said, explaining further; “Unwind the trusts, markets nuke. Get $1.2B at par, likely $900m with 25% haircut on nuking.”

However, the latter of the two alternatives would make the sale of Grayscale impossible, so according to the Delphi Ventures co-founder, there are two main options:

1/ Sell Grayscale and sell GBTC/ETHE holdings =$600M + $471M =1.071B

2/ Unwind Grayscale (can’t sell if unwind) and get assets back at par or $900M.

Neither option is enough to bring in the $2.05B needed. So where will the rest come from? According to Shaughnessy, it could possibly come from Silbert or DCG’s risk book:

Possibly Barry, but I’d probably not backstop here given the risk. Possibly DCG’s venture book, but doubt it with firesale prices in a bear.

There is a large shortfall. I think it’s going to be very messy and drawn out. Gemini could bridge the gap between what they obtain from Genesis (from DCG) with their equity or personal holdings.

At press time, the Bitcoin price stood at $16,783, still showing historically low volatility.

Bitcoin BTC USD
Bitcoin price (BTC/USD), 1-day chart

Featured image from CNBC, Chart from TradingView.com

ShareTweetShareShare

Sign Up for Our Newsletter!

For updates and exclusive offers enter your email.

I consent to my submitted data being collected and stored.

Jake Simmons

Jake Simmons

Related Posts

crypto

Crypto Advice: 8 Of 10 High Net Worth Individuals Seek Guidance On Bitcoin

3 hours ago
Bitcoin Soars In Nigeria As Government Promotes Digital Cash

Bitcoin Soars In Nigeria As Government Promotes Digital Cash

14 hours ago
Bitcoin Crypto

Can The Federal Reserve Counterattack Stop The Crypto Bull Run?

20 hours ago
Bitcoin

Bitcoin Bearish Signal: Aged Supply Flows Into Binance

1 day ago
Bitcoin this week

Bitcoin And Crypto This Week: Here’s What Will Be Important

1 day ago
Bitcoin price

Bitcoin Price Nears $24,000 Mark – Can Bulls Push BTC To $25K This February?

1 day ago

Premium Partners

Premium Casino Partners

Top Casinos

BitStarz
BitStarz
Punt Casino
Punt Casino
mBit
mBit
Metaspins
Metaspins
1xBit
1xBit
Coinplay
Coinplay
K8
K8
Vegas Casino
Vegas Casino

Sportbooks

Coinplay
Coinplay

Press Releases

  • The Top 7 Altcoins To Buy in 2023 for 10x Gains

    2 hours ago
  • Metacade Features the Best Play to Earn Crypto Games...

    2 hours ago
  • Red Pill Studio Announces Private Round for TrainCraft Game

    4 hours ago
  • California DMV Puts Car Titles On Tezos (XTZ) Blockchain...

    6 hours ago
  • Bitcoin Cash (BCH) Associates With TREZOR Wallet, Litecoin...

    6 hours ago

Bitcoin news portal providing breaking news, guides, price analysis about decentralized digital money & blockchain technology.

Bitcoin

  • News
  • Price
  • Businesses
  • Acceptance
  • Technology
  • Investment
  • Regulation
  • Reviews

Altcoins

  • News
  • Price
  • Ethereum
  • Ripple
  • Litecoin
  • EOS
  • NAGA

Categories

  • Blockchain
  • Security
  • FinTech
  • Technology
  • Trending
  • Breaking News
  • Press Releases
  • How to

Pages

  • Contact us
  • Editorial Policy
  • Advertise
  • Crypto Prices from Nomics
© 2023 Bitcoinist.com. All Rights Reserved.
  • Bitcoin
    • News
    • Price
    • Businesses
    • Acceptance
    • Technology
    • Investment
    • Regulation
    • Reviews
    • All Bitcoin News
  • Altcoins
    • News
    • Price
    • Ethereum
    • Ripple
    • Litecoin
    • EOS
    • NAGA
    • All Altcoin News
  • Tech
    • Blockchain
    • Security
    • FinTech
  • Industry
    • Industry News
    • Press Releases
  • Price
    • Bitcoin Price
    • Ethereum Price
    • Litecoin Price
    • Binance Coin Price
  • How to
    • Buy gift cards/mobile Top Ups with Cryptos
    • What Is Bitcoin?
    • Best Bitcoin Wallet
    • Bitcoin vs Ethereum
    • Why Use Blockchain Technology?
    • Bitcoin Cash ABC vs. Bitcoin Cash SV
    • How to Buy Cryptocurrency
    • Bitcoin Mining
    • Best Bitcoin Brokers
    • Best Bitcoin Forex Brokers
    • How To Earn Bitcoin
    • What is Facebook Libra?
    • Ripple and XRP: The Complete Guide
    • Bitcoin Casinos – Where, What and How to Play
  • Events
  • Play Games
  • Play Casino Games
  • Win 1 BTC

© 2022 Bitcoinist. All Rights Reserved.

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy Center or Cookie Policy.