Source: https://www.linkedin.com/feed/update/urn%3Ali%3Ashare%3A7015983290050387968
Under #Gemini #Earn, #investors lent Gemini #crypto #assets in exchange for high #interest payments. Gemini then lent the #digitalassets to #Genesis. But #Genesis #halted all #withdrawals and transactions in early November because of its exposure to bankrupt crypto platform #FTX, causing a #liquidity #crisis for #Gemini. Last week, investors sued Gemini, as well as Winklevoss brothers, accusing them of #fraud and of selling interest-bearing accounts without registering them as #securities. https://lnkd.in/gWery7RA :
Latest on #Gemini-#DCG Spat: https://lnkd.in/gNYma8MF : Gemini founder claims #Genesis-#DCG are ‘beyond commingled’ like #FTX-#Alameda:
#Winklevoss has alleged that DCG owes Genesis $1.675 billion. “This is money that Genesis owes to Earn users and other #creditors,” Winklevoss said, alleging that DCG used those funds for other purposes, including “greedy #share #buybacks, #illiquid #venture #investments and kamikaze #Grayscale #NAV #trades.” #Grayscale Investments is also a unit of DCG, and its largest investment vehicle is the Grayscale Bitcoin Trust. * In a tweeted response Monday, Silbert denied both that DCG borrowed $1.675 billion from Genesis and that it had missed an #interest payment to Genesis, and said it is current on all #loans outstanding.
* The Grayscale Bitcoin Trust GBTC recently hit a new record low discount compared to the price of Bitcoin BTC as a result of contagion stemming from one of the largest #crypto #exchanges, #FTX, declaring #bankruptcy. https://lnkd.in/gtSxNuHa : With GBTC trading at a discount, investors might be looking at that as an opportunity. But before deciding to do so, it can be helpful to understand just how the Trust works and how it differs from owning Bitcoin itself.
The GBTC was designed for investors who want exposure to #Bitcoin without having to actually own the asset. Investors buy #shares of the Trust on the #stockmarket, and Grayscale holds the actual Bitcoin. Knowing that the GBTC owns the Bitcoin is important, but to truly understand why the #Trust is trading at a discount, you need to understand the dichotomy between a trust and an #exchangetradedfund (#ETF).
The GBTC is currently valued at around $10.3 billion and owns 643,572 Bitcoins. Since it is a trust (and not an ETF), Grayscale cannot actively manage the value of its Bitcoin relative to the number of shares bought or sold by investors. When investors buy or sell their shares of the Trust, Grayscale doesn’t immediately turn around and buy or sell Bitcoin. For the most part, Grayscale hopes that the free market values shares of the Trust relatively close to the value of the Bitcoin it owns. However, that has recently failed.
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