Grayscale is one of the world’s largest crypto Assets managers and is headquartered in the United States. The digitally-native company is owned by Digital Currency Group(DCG), the parent company also owns the recently bankrupt Genesis, a crypto lending firm.
Genesis crypto lender was among the most successful subsidiaries of DCG and was founded in 2015 by Barry Silbert, the Chief Executive Officer of Digital Currency Group.
FTX, a centralized crypto exchange founded by Sam Bankman Fried, filed for bankruptcy along with its hundred-plus subsidiaries in US Delaware on November 11. Following FTX’s bankruptcy, Genesis paused its withdrawals on November 16.
The crypto lender subsidiary of DCG filed for bankruptcy on January 19, 2023, owing over $3.4 billion to creditors. The lender’s lawyer said that the firm could resolve its customer disputes by this week and is expected to come out of Chapter 11 bankruptcy by the end of May 2023.
According to data from a crypto news website, Genesis consists of over 5 billion dollars in assets and liabilities and owes over 100,000 creditors around $ 3.4 billion.
The lending firm noted in its official statement that it would contemplate a potential sale or stock-related transaction to pay creditors and had $150 million in cash to support the restructuring.
According to a company executive, “Grayscale Investment has prepared for a long legal fight against the U.S Securities and Exchange Commission to create a spot bitcoin exchange-traded fund.”
This problem arose after the SEC rejected the application of Grayscale to convert its flagship Grayscale Bitcoin Trust(GBTC) into an ETF. The regulators declined the application stating that the proposal did not meet the standards designed to prevent fraudulent practices and protect investors.
In the lawsuit, Grayscale claims that the SEC’s approval of other BTC-related products, such as its approval of a BTC futures ETF on the Chicago Mercantile Exchange (CME), is inconsistent with its rejection of Bitcoin ETFs.
In the official court filing, Grayscale noted that “The Order in this case is arbitrary to its core. Its central premise – that the Exchange’s surveillance-sharing agreement with the CME provides adequate protection against fraud and manipulation in the Bitcoin futures market but not the spot Bitcoin market – is illogical.”
GBTC Stock prices try to break the regression trend being formed. The trends show the prices may witness seller’s resistance near $14. The prices have tested the support zone near $7.70 several times recently. The volume presents an ambiguous picture, with buyers and sellers interacting in the market.
If the prices successfully breach the resistance a rally reaching near $16 may be established.
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/2023/01/28/is-genesis-bankruptcy-troubling-grayscale/