This Cryptocurrency Company Is Selling Those Coins In The ‘Dark Market’!

This Cryptocurrency Company Is Selling Those Coins In The ‘Dark Market’!
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This Cryptocurrency Company Is Selling Those Coins In The 'Dark Market'!

A coordinated sale of cryptocurrencies owned by Digital Currency Group (DCG) caught the eye on Saturday. This sale apparently opened a “dark market” where Genesis’ assets were traded.

Is DCG selling its cryptocurrencies?

An anonymous crypto enthusiast named Andrew, who describes himself as Founder X, shared:

Genesis creditor rights are starting to be sold in small lots in what could be described as the ‘dark market’. Two processes worth more than $15 million were closed at 35% of the cost of the pre-withdrawal suspension.

He argues that he is the source of this trade, which we cannot verify. Andrew says this activity is increasing and adds:

There is an increase in both buyers and sellers of multiple operations and pre-bankruptcy claims in the 35-50% range of principal. Sale of DCG portfolio tokens scared many last night

This Cryptocurrency Company Is Selling Those Coins In The 'Dark Market'!Sale of DCG assets, December 2022

What’s in the background of the sale?

Genesis Capital suspended withdrawals last month following the loss of $1 billion in now-defunct crypto hedge fund Three Arrows Capital and $170 million in recently bankrupt exchange FTX. They had $1.8 billion in outstanding loans. Also, rumors now show that gaps are similar, around $2 billion.

Some say DCG owes Genesis about $1 billion. They also state that the situation has remained unresolved for a month. Saturday’s sale may have raised some measure of funds to fix the problem. But if they liquidated assets, it also indicates that they actually ran out of cash. That’s because the business at Grayscale Trusts has dried up from billions a month in 2021 to just $100 million in all of 2022. They still have the right to get the administration prices. However, this is not a public company. Therefore, it is not clear whether they impose a cap on their costs. What is somewhat clear, however, is that they do not have the cash on hand to resolve this Genesis situation, which, at worst, could potentially lead to the dissolution of Grayscale Trusts.

This Cryptocurrency Company Is Selling Those Coins In The 'Dark Market'!

The source of the problem is not being able to convert to ETF!

It is not clear what effect this will have. Because it hasn’t happened before. However, the funds continued to be one of the preferred investment routes for US-based institutional investors. It acts as a booster during a bull market, with a six-month lock-in period that seems to remove assets from the market for a while. However, it’s possible that the opposite is true during a bear market. However, for some reason, redemptions almost never happened. It is possible that the theoretical discount will also affect the global price of Bitcoin. Because if the funds are fully supported, why buy spot Bitcoin instead of 50% off GBTC?

And yet, investors aren’t biting with stock price action suggesting they’re basically trapped. Converting it to an ETF might be a way out. However, the Securities and Exchanges Committee (SEC) is challenging this in court. As such, investors are basically locked in. Also, investors do not know whether they will result in a complex liquidation of funds. So the Genesis anonymity makes the situation even worse. As a result, the funds are not very attractive at the moment.

This Cryptocurrency Company Is Selling Those Coins In The 'Dark Market'!

DGC owns these 18 cryptocurrencies

We mentioned that DGC can use part of its portfolio to avoid the risk of bankruptcy. Information provided by Messari shows that the company currently owns 18 cryptocurrencies:

  1. Hedera Hashgraph (HBAR)
  2. Filecoin (FIL)
  3. Flow (FLOW)
  4. Zcash (ZEC)
  5. Decentraland (MANA)
  6. Bitcoin (BTC)
  7. Ethereum (ETH)
  8. Reserve Rights (RSR)
  9. Horizon (ZEN)
  10. Ocean Protocol (OCEAN)
  11. Civic (CVC)
  12. API3 (API3)
  13. Handshake (HNS)
  14. Ethereum Classic (ETC)
  15. The Graph (GRT)
  16. Stacks (STX)
  17. Basic Attention Token (BAT)
  18. Livepeer (LVP)
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