Global giant Digital Currency Group (DCG) is struggling with financial problems in its subsidiaries, also with the effect of FTX events.
The effects of the FTX bankruptcy are being felt heavily in the crypto industry. FTX, one of the largest cryptocurrency exchanges in the world, was reset in a very short time. The stock market, which has a daily trading volume of over 10 billion dollars, suffered a major bankruptcy with the influence of its sister company Alameda. The company, which once managed to reach a value of 60 billion dollars, shook the agenda by being reset in a short time. The collapse of FTX and Alameda also brought the end of the subsidiaries. BlockFi became the next subsidiary filing for bankruptcy. Investors, considering all these processes, are greatly concerned about Genesis issues. Because it belongs to the Digital Currency Group, which includes companies such as Genesis, Grayscale and Coindesk.
Genesis Company’s Lending Platform Starts The Trouble
Last month, Genesis’ credit platform stopped withdrawals, citing the FTX collapse. Unable to pay off its customers’ millions of dollars in assets, the company branch reported that it would not be able to make redemptions and new loan purchases.
The company, which has two different managements as Genesis Global Capital and Genesis Global Trading, stated that the Capital side has stopped the withdrawal process. According to the CEO’s statement, Genesis’s trading leg continues independently. The incident, which did not affect the parent company and the Trading leg, was attributed to the liquidity problems on the Capital side.
This problem, which erupted by Genesis Capital, did not receive any intervention from the Digital Currency Group (DCG), which manages a $ 50 billion asset. DCG, which also owns a giant company like Grayscale, did not or could not solve the problems on the side of Genesis Capital.
Genesis Searches for Liquidity
Lending platform Genesis Global Capital sought liquidity after it stopped withdrawals. It was also noteworthy that there was no intervention from its parent company or Genesis Global.
Another eruption soon came from Gemini. The Earn protocol, run in partnership with Gemini and Genesis, was also affected by the issues. According to the statement from the Gemini exchange, an asset of $ 900 million is stuck inside. The companies also said in a joint statement that they are working together to resolve issues with the Earn protocol.
In the midst of these struggles, a striking statement came from the company, which previously reported that only one arm of Genesis had problems. Genesis has announced that it will go bankrupt if it cannot find a $1 billion asset. The company, which has an obligation of 900 million dollars to Gemini, demanded 1 billion dollars was seen as proportional. However, the billion-dollar situation, which was seen as a problem of only one line of business, spread to Genesis.
Binance news also started to resonate during Genesis’ search for liquidity. Binance first announced that it would buy Genesis, then announced that it was giving up on this decision. As you may recall, Binance did the same for FTX. Binance CEO Changpeng Zhao (CZ) reversed this decision shortly after he gave the message that he would buy FTX.
It was noteworthy that Genesis also followed the path of FTX. Investors began to think that they might be facing a new FTX case. However, another question came to mind. Genesis was owned by the Digital Currency Group, which also includes Grayscale and Coindesk.
Genesis on the Verge of Bankruptcy
Genesis, which was looking for a billion-dollar resource and stated that it would declare bankruptcy if it could not find it, received a blow from the US regulators. Regulators began investigating the Genesis company. The company, which is audited by many experts, is being examined for a possible FTX collapse.
There was also a new move from the crypto company towards the end of last month. Genesis began negotiations with its creditors to avoid bankruptcy. In addition, the company knocked on the door of restructuring lawyers. The closure of withdrawals, which was shown as only a minor problem at the beginning of the events, started to grow like an avalanche. But the scenario is the same, the entire crypto industry has experienced these processes on the FTX side. First, the Alameda company had liquidity problems, then FTX also embarked on bailouts. However, it was found that they used customer funds in their rescue operations. Alameda turned out to be sunken and FTX was learned to be dragged after it. Then they all started falling towards the black hole. These two sister companies also bankrupted hundreds of companies they bought.
Genesis, which turned out to be owed $900 million to Gemini customers, has recently heard a new news. The company’s debt burden reached around $2 billion. Creditors and the accumulation of liabilities constantly increase the debt burden of the company.
So why isn’t Grayscale making the move for Genesis?
Grayscale, which manages approximately $ 10 billion in Bitcoin assets, has not made a move for its sister company Genesis. The company, which launched with the Grayscale Bitcoin Trust (GBTC) to make Bitcoin trading easier, just stated that they were not affected by the Genesis events.
It was a matter of curiosity why the global investment giant Grayscale company did not make a move. The two companies, which have been compared to Alameda and FTX, avoided acting together. So why?
Grayscale does not lend a hand on Genesis because it went through troubled processes due to GBTC products. GBTC, which he created in the past years, attracted great interest and reached a value of billions of dollars. However, these stocks could not avoid the effects of the crypto bear market. With the emergence of different Bitcoin stocks, interest in GBTC has dwindled by almost 70 percent. It was as if the GBTC craze was put on dusty shelves. The effect of this was staggering for Grayscale as well. Although the company was not shaken, it lost power. The FTX bankruptcy also had a shocking effect on the company, which is working to become a stronger structure. The market, which became insecure due to FTX, also affected Grayscale investors.
Grayscale Bitcoin Trust (GBTC) share priceConsidering measures against a possible collapse scenario and the possibility of the Bitcoin bear market to continue for another year, Grayscale seems to be playing three monkeys to the Genesis side.
If Genesis Fails, Will Grayscale Overthrow?
The Digital Currency Group (DCG), which manages an asset of approximately 50 billion dollars, does not play its cards openly in the face of the problems experienced within its body. The giant company did not pay attention to the scenarios on social media.
CoinDesk, the news channel with an annual revenue of $ 50 million, is among the companies DCG plans to put on sale. DCG aims to alleviate its debt burden with the income it will generate from this sale. The allegations that the news channel would be sold put forward that DCG actually took the events seriously.
If the FTX scenario repeats and Genesis goes bankrupt, its sister companies may also be affected. Grayscale, which is far from the power it had last year, is among the companies that will be most affected by the collapse of Genesis. The collapse of Genesis will create an atmosphere of distrust for all partner companies. Grayscale, which serves institutional investors, may face a decrease in share prices and exits from GBTC in the face of this situation.
Grayscale Bitcoin Trust shares fell from $ 55 to $ 8 levels. The Genesis bankruptcy may also contribute to this jarring impact of market conditions. The bankruptcy of one of the partner companies is not known to what extent it creates an environment of trust for the others. However, investors don’t want to be checkmate twice in the same game.
Will Grayscale Collapse End DCG?
The possible bankruptcy process that may occur on the side of Genesis may lead to decreases in Grayscale share prices and institutional investor exits. In the event of such a situation, Grayscale assets will also be in distress. Events that will affect all sister companies with the effect of dominoes may have repercussions on DCG.
To examine it as a schema;
1- Genesis bankruptcy and billions of dollars in debt obligations to parent company DCG.
2- DCG sells CoinDesk to get rid of debt obligations.
3- Grayscale investors withdraw their assets due to an environment of panic and fear.
4- Significant decrease in share prices on Grayscale’s side, which is exposed to investor exit.
5- Liquidity problems that may occur on the Grayscale side due to loss of share value and investor exits.
6- The difficulties that DCG will experience in the liquidity problems that occur on the Grayscale side.
7- The giant company, which wants to survive, begins to convert all crypto money into cash.
This is how we can call dominoes. However, it should not be forgotten that DCG company manages a $ 50 billion asset. This scenario has been interpreted as analogous to the FTX bankruptcy. The collapse of FTX was due to the greed of the executives and the use of investor assets. On the DCG side, such problems were not reflected in the press. Only the crisis in assets took place on the agenda.
Also, in this crash scenario, the crypto industry could also be severely injured. Because the company will want to turn the crypto assets it holds into cash in order to survive.
However, the crypto industry, which has been purged of its bad actors one by one, has the power to become a more reliable industry in the near future.
20242
