Grayscale is one of the largest digital asset managers in the world. Grayscale is owned by Digital Currency Group(DCG), which also manages the operation of crypto lender Genesis, which recently filed for bankruptcy.
Genesis opted to file for bankruptcy after the collapse of the world’s third biggest crypto exchange, FTX.
Genesis had massive and prolonged exposure with the once third largest crypto exchange FTX and failed crypto hedge fund, 3 Arrows Capital. After FTX filed for bankruptcy, 3 Arrows followed suit because of its exposure to FTX.
The crypto lender only holds $150 million in cash. The firm believes this amount is enough to sustain its business operations and will be helpful in the restructuring process.
It is assumed that Grayscale may file for bankruptcy because it belongs to the same company that handles bankrupt crypto lender Genesis operations.
Grayscale accounts for a total of 643,572 BTC, which is worth estimated at $10,207,633,177 billion. This is 3.065% of the total supply of 21 million.
On November 16th, 2022, Genesis paused all withdrawals to preserve and maximize the value of the estates, ensure fair distribution and prevent a bank-run situation. The Debtors’ lending and borrowing business (GGC and GAP) remain paused.
In the one-month time frame, GBTC(Grayscale Bitcoin Trust) ascended by 54.07%, and at the time of writing, it was trading at $12.11.
According to CNBC, the District of Columbia Court of Appeals scheduled a date to hear the arguments in Grayscale’s lawsuit contesting the Securities and Exchange Commission’s (SEC) decision. The SEC decision is to deny the application of Grayscale to convert Grayscale Bitcoin Trust (GBTC) to a spot Bitcoin exchange-traded fund (ETH).
The Court order filed on January 23rd, 2023, states that Grayscale and the SEC will present their case to the Court at 9.30 a.m. ET on March 7th, 2023.
The collapse of FTX stirred the crypto market, and renowned crypto-related firms followed the path and are filing for bankruptcy one after another including BlockFi and Genesis.
It is feared that several other exchanges and lenders may file for bankruptcy in the upcoming months.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing
Source: https://www.thecoinrepublic.com/2023/01/27/will-grayscale-follow-the-genesis-bankruptcy-path/