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the contagion from FTX and Alameda is spreading and even some of the biggest players in the crypto industry could be exposed and they dont come much bigger than digital currency group or dcg an umbrella company with a lot of fingers in a lot of Pies some of those fingers could be about to get badly burned and some of those pies may be about to get spoiled the concerns around all this are a big part of why crypto prices are heading south today too so for those unfamiliar dcg is a crypto Behemoth its invested in a number of companies and that portfolio includes some of the most well-known names in the industry including bitco block stream channelysis Circle coinbase coindesk Dapper Labs June analytics etherscan etoro fireblocks and uh FTX and thats before we get to G in the alphabet which is where things get really spicy more on that in a moment in short dcg is a big big deal and its CEO Barry silbert is one of the most powerful and Elusive people in the industry which brings us to those Gs now among its several subsidiaries dcg counts both Genesis trading and grayscale not exactly small fry themselves now Genesis is a prime broker that is a deal that offers custody of crypto assets over-the-counter or OTC trading thats the sort of buying and selling of crypto assets not available to us mere mortals and it also extends credit to its clients for good measure think of it as sort of a crypto Investment Bank now if youre unfamiliar with Genesis thats most likely because well it caters for big institutional clients and not peasants like us there you go bring it sorry now Prime Brokers make markets in OTC deals in which the assets being sought are sometimes not listed on exchanges that means that theyll act as an intermediary in an OTC deal they make the market however sometimes they find themselves in a position where they cant find a counterparty for a trade but they are still obligated to take the risk of a trade until a counterparty can be found this is called an odd lot and its one of the risks that middlemen like genesis face the upside is of course that market making and brokerage can be incredibly profitable especially when youre doing it for Rich institutions if you want a more detailed rundown of what prime Brokers like genesis do then this tweet thread by Ram alawalia is incredibly helpful link below now Genesis is also one of the largest lenders and borrowers in the crypto market and this is where it faces some of its biggest risks including that of a mismatch in the duration of its assets and or liabilities for example as in the Tweet thread I just mentioned theres the example of loaning crypto out to funds for longer terms I.E long duration however they borrow funds from retail users at shorter duration and Redemption through for example Gemini earn when retail rushes to withdraw from these products they put the broker in a bind as they need to call back their loans early which costs money on top of this as a prime broker you have counterparty risk in case any of your institutional borrowers dont repay now one of genesiss recent counterparties was none other than three arrows Capital which cost Genesis quote hundreds of millions the Genesis CEO at the Time Michael Morrow resigned as a result of this and Genesis had to be bailed out by its parent company dcg another good example of how quickly contagion can spread in the crypto Market since then of course the crypto Market kit has gone from bad to worse there are concerns that Genesis might have had loans out to several C5 lending platforms whose subsequent failures could mean that Genesis has a lot of loans outstanding that it might now have to recall now genesiss exposure to FTX is a bit murkier and Genesis initially claimed it had limited exposure to the now collapsed Exchange in a pattern that is now becoming wearingly familiar however that later changed to uh well when we said no exposure we did mean that our derivatives business actually has 175 million dollars stuck on FTX but you know its all good or something along those lines this resulted in daddy dcg having to Fork out 140 million dollars to keep the wolf from genesiss door an amount that now pales in comparison to the reported one billion dollars that the company later claimed it needed to be able to honor client withdrawals boy that escalated quickly sadly these billion big ones werent forthcoming and Genesis was forced to pause withdrawals last Monday adding to the fears already stalking the market now given Geminis relationship with Genesis concerns then started to flare up that Geminis earned platform may also be at risk cue another flurry of withdrawals that Gemini seems thankfully to have been able to cope with if an exchange that has been among the most compliant in the industry had been shown to be insolvent perhaps all hope could have been lost so will dcg look to salvage Genesis or let it go under can Genesis secure funding from elsewhere or will it go bankrupt or perhaps get sold to some well-capitalized prime broker in the treadvice space those outcomes are all possibilities so thats Genesis a big crypto company that once seemed to have the world at its feet and is now on thin ice broader concerns are now shifting to the other Big G in dcgs portfolio though grayscale a slightly more familiar name than Genesis grayscales big claim to fame is its Bitcoin trust which became one of the First Institutional investment vehicles for Bitcoin back in 2013. nine long long years ago institutions can buy shares in this trust under the ticker gbtc now grayscale owns 640 000 BTC which are supposed to back up its gbtc shares however these are trading at a massive discount a record low in fact until recently no one was particularly concerned about the possibility that all those gbtc shares werent backed up by actual BTC however a recent tweet from greyscales set off alarm Bells quote due to security concerns we do not make such on-chain Wallet information and Confirmation information publicly available through a cryptographic proof of Reserve or other Advanced cryptographic accounting procedure translation no we wont show proof of reserves because someone may try to steal those reserves if we do fortunately for grayscale coinbase later came in to back it up but be that as it may the discount is still really bad news for grayscale gbtc Shares are viewed as a poor and less liquid alternative to shares in a possible spot Bitcoin ETF which grayscale did actually apply to turn its Bitcoin trust into earlier this year the SEC rejected the application and grayscale is now suing the SEC in return the fear stalking the crypto market now is that the dwindling value of gbtc shares may lead to a rush of redemptions for the BTC being held by greyscale to back those shares up if that BTC is unlocked theres a good chance a lot of it will hit the market adding further selling pressure and pushing prices down even more it appears that the red lines all over the crypto charts today are largely as a result of these concerns now this is yet another one of those eventualities that would have seemed nion impossible just a few weeks ago and is now looking a little too possible for Comfort thats not to say it will happen by any means but the mere fact that were talking about it shows is just how far confidence in crypto has sunk since we all learned just what a degenerate SPF actually is the rumors doing the rounds now are that dcg is trying to raise an emergency one billion dollars to keep Genesis grayscale and possibly even dcg itself afloat funnily enough no one seems willing to Pony up the cash though I should add that these are just rumors at this stage one cause for concern however stems from Barry silbert himself who has contended himself with a few retweets of late and hasnt tweeted anything directly since the 6th of November Ive got to say it Barry but if ever there was a time to come out and lead from the front this might very well be it now rumors are rumors but as weve seen in recent weeks they can become serious issues themselves if they Dent peoples confidence in the markets so where now if Genesis grayscale and dcg can resolve these issues and dispel at least some of the rampant uncertainty thats out there then perhaps the market can recover a little if they cant and yet more big dominoes start falling then you can be sure were due another plunge add in force-selling liquidations and potentially miners going under as the weather gets colder well then we still have a lot lot further to fall Get The Hottest Crypto Deals Insider Info in Guys Socials My Merch Store TOP Crypto TIPS In My Newsletter ~~ Tweet Thread by Ram Ahluwalia: ~~ Disclaimer The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Trading cryptocurrencies poses considerable risk of loss. The speaker does not guarantee any particular outcome. crypto ftx cryptocurrency cryptonews cryptocurrency,ftx,crypto,
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