Bitcoin price fell to a new bear market low of $15,487 on Monday after rumors surfaced that Genesis Trading and Digital Currency Group (DCG), which also owns Grayscale with its 635,000 BTC strong GBTC, would go bankrupt.
Since then, the Bitcoin price has registered a relief rally. At the time of writing, Bitcoin was trading at USD 16,598 and facing the crucial resistance zone at USD 16,000. If this resistance is overcome, a fast candle towards $17,500 to $18,000 could be on the table.
DCG /Genesis safe?
However, Bitcoin investors may be wondering what has changed in the whole Genesis/DCG and Grayscale woes?
DCG CEO Barry Silbert released an alleged letter to investors yesterday. In it, the CEO explained that while DCG owes $575 million to its own trading arm, Genesis Trading, it is not due until May 2023.
Silbert also stressed that DCG will reach $800 million in revenue by 2022. While this represents a decrease of about 20% from the previous year, Silbert said revenue should still be enough to pay for Genesis.
Furthermore, DCG’s CEO also confirmed that the company owes Genesis $1.1 billion on a promissory note due June 2032 related to the bankruptcy of Three Arrows Capital.
“Genesis leadership and their board decided to hire financial and legal advisors, and the company is exploring all possible options amid the fallout from the FTX implosion,” Silbert confirmed in his letter, adding that “we will let you know or we decide to do a financing round.”
The letter seems to have calmed the market. However, Crypto-Twitter is still puzzling over possible scenarios on how DCG can overcome its precarious financial situation. One of the main sources of rumors in recent days, Andrew Parish, co-founder of ArchPublic, continues to claim internal, anonymous sources.
VC/lawyer saw that @DCGco data room per increase:
“Current valuations are way off, liabilities dwarf assets…almost impossible not to see a DCG bankruptcy shortly after Genesis.”
— Andrew (@AP_ArchPublic) November 22, 2022
Parish accuses DCG of bluffing, claiming Silbert’s note was not sent to investors. He receivables having heard from various investors and creditors of DCG and Genesis:
This wasn’t sent to us first, we didn’t see it until it was posted online/twitter.
It’s all optics to mitigate a Genesis bankruptcy for DCG… and lawsuits that will follow.
An all-good solution?
Parish also rejected the supposed “solution” of Messari co-founder Ryan Selkis. Selkis suggested that some of the Genesis creditors could convert their claims into DCG preference or debt and warrants (“the Buffett-Goldman deal”), “possibly led by a reputable debt or growth fund”.
There are many things that led to this mess, but the current situation seems salvageable. I have no direct interest in this, I just want to see a good solution, and there is not much time.
Parish countered that DCG and Genesis “do not yet have meaningful dialogue with Genesis creditors,” as he was told by supposedly large investors.
So what’s the deal? No one knows at this point, except presumably DCG CEO Barry Silbert! Mind your safety.
