The cryptocurrency conglomerate known as Digital Currency Group (DCG) is apparently getting ready to generate cash and maintain its liquidity by selling its assets in cryptocurrency funds that are managed by a subsidiary of the company known as Grayscale Investments.
According to a report that was published on February 7 by the Financial Times, which cited United States securities filings, DCG sold approximately one quarter of its shares in Grayscale’s Ether (ETH)-based fund for approximately $8 per share, despite the fact that each share held a claim to nearly double that amount in ETH. The filings were cited in the report.
In addition to this, it is said to have sold down small share parcels in Grayscale’s Litecoin (LTC), Bitcoin Cash (BCH), and Ethereum Classic (ETC)-based trusts. This is in addition to its Digital Large Cap Fund, which is a single fund that invests in Bitcoin (BTC), Ether, Polygon (MATIC), Solana (SOL), and Cardano (ADA).
The response that DCG gave when queried about the share sales was that “it is just part of our regular portfolio rebalancing.”
In spite of this declaration, there are others who feel that Barry Silbert’s DCG might be heading for some kind of financial difficulty.
Another of its companies, the cryptocurrency lending business Genesis Global Capital, filed a bankruptcy petition on January 19 and is reported to owe its creditors more than $3 billion.
Companies controlled by DCG have been significantly impacted by the contagion that has resulted from FTX’s downfall. Over the last several weeks, these companies have been forced to let go of over 500 people.
However, DCG has taken a number of actions to maintain liquidity in 2023, such as informing its shareholders in a letter dated January 17 that it would be discontinuing its quarterly dividend payments as it seeks to improve its balance sheets. This was one of the many initiatives that DCG has done.
After stating that it had received offers for the cryptocurrency media outlet CoinDesk that were greater than $200 million, DCG has reportedly sought the assistance of the financial advisory firm Lazard in order to assist it in weighing up options to sell CoinDesk, which is another of its subsidiaries.
According to the company’s website, DCG’s venture capital portfolio includes about 200 crypto-related startups, some of which include Grayscale, Genesis, and CoinDesk. Additionally, DCG has interest in a number of other businesses, such as the cryptocurrency exchange Luno and the advising company Foundry.
A new class action lawsuit has been filed against the cryptocurrency corporation Digital Currency Group (DCG), making the company’s legal woes even more numerous. The claim was filed against DCG’s subsidiary Genesis Capital.
In a securities class action (SCA) lawsuit against DCG and its founder and CEO Barry Silbert, creditors of Genesis allege that the defendants violated laws governing the sale and purchase of securities in the United States.
On behalf of people and companies who engaged into digital asset loan arrangements with Genesis, the legal firm Silver Golub & Teitell (SGT) of Connecticut filed the action. The plaintiffs in the case are seeking compensation for their losses.
The legal company is well-known in the sector for managing important litigation, such as the class action complaint that was brought against Coinbase in March 2022.
In the new complaint filed against DCG and Silbert, it is alleged that Genesis engaged in an unregistered securities offering in violation of securities laws. Specifically, it is alleged that Genesis violated securities laws by executing lending agreements involving securities without first meeting the requirements for an exemption from registration under federal securities laws.
The complaint also claims that Genesis engaged in securities fraud by devising a plan to deceive new and current digital asset lenders by providing false and misleading representations. This is said to have occurred as part of a strategy to steal money.
Plaintiffs allege that Genesis knowingly misrepresented the company’s current financial situation, which constitutes a violation of section 10(b) of the Securities Exchange Act of the United States. ” The scheme to defraud was carried out, according to the complaint, in order to induce prospective digital asset lenders to loan digital assets to Genesis Global Capital and to prevent existing lenders from redeeming their digital assets,” SGT lawyers noted. ” The goal of the scheme was to induce prospective digital asset lenders to loan digital assets to Genesis Global Capital.”
DCG is a cryptocurrency company based in Connecticut that was established in 2015. It functions as the parent company of several digital asset and blockchain-focused subsidiaries, some of which include Genesis, a digital asset manager called Grayscale Investments, a cryptocurrency mining company called Foundry, and a cryptocurrency media outlet called Coindesk.
Silbert, the current CEO of DCG, has a controlling ownership share in the company equal to forty percent and also serves as the chairman of the board of directors for DCG.
The announcement was made as Genesis was in the midst of its first bankruptcy proceedings on January 23, after the company’s first bankruptcy filing on January 19.
The bankruptcy petition was filed a few months after Genesis temporarily ceased withdrawals on November 16 due to the fact that the company had been unable to execute redemption requests in light of the bear market in cryptocurrencies.
It has been revealed that Genesis owes $900 million to the customers of the cryptocurrency trading platform Gemini, which was established by the Winklevoss brothers. Gemini is one of the most significant debtors of Genesis.
Cameron Winklevoss, one of the co-founders of Gemini, went to Twitter on January 20 to announce that the company was ready to take direct legal action against DCG, Silbert, and “those who share culpability for the scam.”
According to recent reports, the cryptocurrency news website CoinDesk is mulling over the possibility of being sold as its parent company, Digital Currency Group (DCG), wants to improve its financial standing.
The Wall Street Journal reports that CoinDesk has enlisted the assistance of investment bankers from the financial advising firm Lazard. These investment bankers are assisting the company in weighing its alternatives, which may include a whole or partial sale.
You know, I recently became aware that Coindesk is now available for purchase.
Charles Hoskinson, who tweets under the handle @IOHK Charles 19th of January, 2023 In the past few months, it has been reported that DCG has received multiple offers for the media company that are higher than $200 million. If these reports are accurate, this would represent an incredible return on investment for DCG given that the company was reportedly purchased by DCG for only $500,000 in 2016.
It would seem that Barry Silbert’s DCG is experiencing significant financial difficulties as of late. On January 17, the company informed its shareholders that it will be suspending dividend payments in an attempt to improve the soundness of its balance sheet and “preserve liquidity.”
On January 18, Bloomberg reported that another DCG subsidiary, crypto lending business Genesis Global, was intending to file for bankruptcy after it revealed that it owed creditors over $3 billion. This is undoubtedly the primary cause contributing to DCG’s current financial predicament.
According to the company’s website, DCG’s venture capital portfolio includes about 200 crypto-related startups, some of which include CoinDesk and Genesis.
The asset management company Grayscale Investments, the cryptocurrency exchange Luno, and the advising firm Foundry are all other businesses that are owned by DCG.
Some people believe that the article published by CoinDesk in November that revealed the irregularities in Alameda Research’s balance sheet was the first domino that eventually led to the collapse of the cryptocurrency exchange FTX as well as the liquidity issues that Genesis, its parent company DCG, and the broader cryptocurrency market are currently facing.
Digital Currency Group CEO and founder Barry Silbert has purchased more ZCash to add to his company’s coffers as the price of the token moved above $240 for the first time in days.
In a Wednesday tweet to his more than 678,000 followers, Silbert announced the purchase of $85 million in Zcash (ZEC), or roughly 376,106 tokens assuming an average price of $226. The buy is just the latest for Silbert, who seems to be portraying himself as a contrarian in the crypto market — responding to negative comments on ZEC by purchasing millions more.
Alright, you asked for it. We bought $85 million more Zcash $ZEC
Pray for us… https://t.co/Pv6i0LO789
— Barry Silbert (@BarrySilbert) December 1, 2021
According to data from Cointelegraph Markets Pro, the price of ZEC surged more than 7% following Silbert’s announcement, from $226.08 to $243.84. However, it has fallen more than 20% since reaching a six-month high of more than $300 on Thursday, shortly after its core protocol’s transition from proof-of-work to proof-of-stake.
Related:ZEC price jumps 20% in one day as Zcash devs unveil transition to proof-of-stake
Crypto whales like Silbert may be buying ZEC in anticipation of more of the project’s tokens going out of circulation due to lockup periods. Zcash’s main developer, Electric Coin Company, announced on Friday that users would be able to stake a portion of their holdings into a dedicated ZEC smart contract to become validators on its blockchain.
Source: TradingView
Digital Currency Group operates Grayscale, a $53.5 billion AUM digital asset manager th offers investors exposure to cryptocurrencies through its trusts. The firm first listed its Grayscale Zcash Trust on the OTCQX Best Market in October. Silbert has also hinted that the company is making plans to convert its Bitcoin Trust into a spot-settled Bitcoin exchange-traded fund.
Zcash (ZEC) surged by nearly 20% in the past 24 hours, helped by the euphoria surrounding its core protocol’s decisive transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS).
The ZEC price logged an intraday high at $188.80 on Binance after rising two days in a row by more than 27%. The cryptocurrency’s move upside also wiped out a big portion of the losses it had faced earlier this week, in the wake of a downside retracement across the crypto market.
ZEC price jumped after the cryptocurrency’s main developer, Electric Coin Company (ECC), announced that it would move Zcash’s protocol from PoW to PoS within the next three years. The nonprofit noted that the upgrade would limit the ZEC price’s downward pressures by removing miners that “immediately liquidate” the token for Bitcoin or fiat.
“This shift will also increase the utility for ZEC through capabilities that include yield generation through staking and a possible path to on-chain governance mechanisms for ZEC hodlers,” added Josh Swihart, the senior vice president of growth at ECC, adding:
“There are other benefits of moving to proof of stake which include the reduction of the ZEC energy footprint, providing a possible path to on-chain governance mechanisms, and support for interoperability by addressing problems with proof-of-work transaction finality, among other reasons.”
ZEC/USDT daily price chart. Source: TradingView
ZEC bulls cashing on the PoS FOMO
Unlike PoW, PoS mechanisms allow a person to mine or validate block transactions based on the number of underlying tokens they hold/stake. In return, the so-called “validator” receives rewards in the form of yields.
Ethereum, the leading smart contracts platform by market cap, also initiated its transition from PoW to PoS after introducing a dedicated smart contract. In response, users locked about 8.33 million Ether (ETH) tokens into the so-called Ethereum 2.0 address, effectively pushing them out of active supply.
ETH/USD weekly price chart. Source: TradingView
ECC’s announcement promised that users would be able to stake a portion of their ZEC holdings into a dedicated Zcash smart contract to become validators on its blockchain. Therefore, as a result, more ZEC may end up going out of active circulation due to lockup periods, against its Bitcoin-like fixed supply of 21 million tokens.
Barry Silbert, the founder, and CEO of Digital Currency Group — a venture capital firm tweeted Saturday that he would “buy more” Zcash tokens, citing their supply cap. His tweet coincided with a sudden ZEC price rise against the U.S. dollar and Bitcoin (BTC).
$BTC max supply: 21 million$ZEC max supply: 21 million$ZEN max supply: 21 million
— Barry Silbert (@BarrySilbert) November 20, 2021
Nonetheless, some analysts argued that Zcash would not have a supply cap after implementing PoS.
For instance, on-chain analyst Willy Woo noted in his response to Silbert’s tweet that if Zcash could “decide to extend the dev tax,” and “if it can switch to PoS and cut out the miners,” then he is confident that the cryptocurrency does not have a maximum supply.
“And,” Woo added, “that’s ignoring the inflation bug of 2018 and assuming we could in fact audit the supply,” referring to the Zcash’s infamous vulnerability that could have created infinite ZEC tokens.
Related: Zcash Vulnerability Permitting Infinite ZEC Counterfeiting Fixed and Disclosed
Minutes after Woo’s remarks on ZEC’s doubtful supply ca, Silbert tweeted:
Wow, you all hate $ZEC. I’m going to buy more
— Barry Silbert (@BarrySilbert) November 20, 2021
Inflection zone
ZEC’s latest push upside made it enter an inflection zone, prominent for its record of capping the cryptocurrency’s rallies.
Specifically, the trading range defined by $170-$205 (the reddened area in the chart below) has earlier provided selling opportunities for traders. Even recently, the ZEC price retreated lower after entering the said range while eyeing extended declines toward the purpled upward sloping trendline.
A clear breakout trend may appear after ZEC closes above the inflection zone, accompanied by rising trading volumes, thus targeting the Fibonacci retracement levels at $247 and $316. Conversely, a decisive close below $170 may risk sending ZEC toward $136.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Ethereum Classic (ETC) reached its highest level in almost three weeks Wednesday, buoyed by Barry Silbert-backed Digital Currency Group’s $50 million investment and by an overall cryptocurrency market recovery led by Bitcoin (BTC).
The 17th-largest cryptocurrency by market value traded as high as $63.19 — a nearly 98% rise from its June 22 low of $31.91. Meanwhile, the market value of all the Ethereum Classic tokens in circulation crossed $7.53 billion.
$ETC was part of the 1%.
+65% since Barry told us he was buying. https://t.co/gIa8FAeUQM
— Hsaka (@HsakaTrades) June 30, 2021
Digital Currency Group (DCG) revealed on June 21 that it has authorized the purchase of up to a total of $50M worth of shares of Grayscale Ethereum Classic Trust (OTCQX: ETCG). Grayscale is a New York-based investment firm that provides accredited investors access to digital currency products in the form of traditional securities.
Grayscale ETC holdings . Source: Bybt.com
On the day of the announcement, Ethereum Classic fell by 22.56%, much in line with the rest of the cryptocurrency market, which, in turn, was responding to China’s increasing crackdown on the regional crypto sector, including a complete ban of mining-related activities.
But despite the heavy sell-off, the Bitcoin and altcoin markets bounced back in tandem. Traders particularly recognized buying opportunities in the Bitcoin market as BTC/USD slipped below $30,000—a psychological support level that lately kept the pair’s downside bias from flourishing any deeper.
Bitcoin has been trading between $30K and $40K since May 19. Source: TradingView.com
Meanwhile, altcoins merely tailed the Bitcoin rebound owing to their high correlation with the top digital asset.
According to data provided by Crypto Watch, the 30-day correlation efficiency between Bitcoin and Ethereum’s Ether (ETH) was 0.83 on Wednesday. A reading of 1 represents a perfect positive correlation between two assets.
Copycat hard fork
ETC’s gains also appeared in days leading up to a major Ethereum Classic blockchain upgrade in July.
In detail, Ethereum Classic emerged from a controversial blockchain split that followed an approximately $150 million hack on the Ethereum-based DAO project in April 2016. The Vitalik Buterin team proposed to wipe out the attack from the Ethereum network history — a ledger rewrite that portrayed Ethereum as a centralized blockchain.
That led to the formation of two Ethereum camps: one that supported the reverting of chain and the other that didn’t. In the end, the differences led to the formation of two competing yet independent Ethereum chains, one of them being the Ethereum Classic.
ETC’s structure as a blockchain project varies from its competitors. Unlike Ethereum, ETC incorporates multiple development teams, including IOHK, ETC Cooperative, ETC Labs, etc. In general, most of these teams have focused on providing scaling solutions.
At the same time, their priority also remains to improve development tools (SDKs) and promoting cross-chain transactions so other projects can also build on Ethereum Classic.
On June 10, Steven Lohja, the lead developer at Mantis IOHK, announced to upgrade the Ethereum Classic blockchain with a hard fork called Magneto. The major update, as Lohja confessed, would be inclusive of the Ethereum Berlin upgrade features introduced earlier this year.
The Ethereum Classic’s improvement proposals tend to improve the blockchain’s network security while cutting down on its gas fees — it does so by storing addresses and keys in one place for users to access with a single transaction.
The ETC hard fork will go live in July, much in sync with Ethereum’s London upgrade around the same period.
ETC technical setup
The latest ETC/USD rebound has come closer to invalidating a classic bearish setup that prevailed earlier.
ETC price was approaching $16.62 following its strong breakdown from the previous triangle range. Source: TradingView.com
The ETC/USD exchange rate bounced mid-way upon breaking its previously prevailing descending triangle setup. The pair found support right above its 200-day simple moving average (200-day SMA; the orange wave in the chart above) and moved higher to close above the triangle support around $51.77.
What’s more, the rebound flipped ETC/USD’s 20-day exponential moving average (20-day EMA; the green wave) from resistance to support. It now appears to do the same with the 50-day SMA (the blue wave) acting as resistance.
On the other hand, adjusting the triangle’s support trendline lower makes it appear like a bullish falling wedge pattern.
ETC/USD has broken bullish out of the pattern, much in line with its classic definition. A strong follow-through could have the pair rise by as much as the maximum Wedge height, i.e., the total maximum distance between its upper and lower trendline. It comes to be around $86.
That shifts the ETC/USD wedge profit target near $130.
Conversely, a potential reversal from 50-day SMA could have ETC/USD test the 20-day EMA as its interim support. Such a move would also risk invalidating the falling wedge structure.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Digital Currency Group, the venture capital firm behind some of the biggest companies in blockchain, has become the second-largest shareholder of Streami, a leading cryptocurrency exchange operator in South Korea.
Barry Silbert, founder and CEO of Digital Currency Group, explained his rationale for backing Streami:
“We expanded our investment in Streami because of their fantastic team and the incredible potential of the digital asset market in South Korea. Streami provides the critical foundation for this market to scale rapidly, and our investment will fuel its position as the most trusted digital asset platform in Korea.”
The investment includes a regional partnership between Streami and Digital Currency Group subsidiary Genesis centered around fixed-term savings products. Streami’s crypto-backed savings product, GOFi, already has over $600 million in user deposits.
The terms of the agreement weren’t disclosed by either company, although it was confirmed that Digital Currency Group has become a major stakeholder. Digital Currency Group was among Streami’s earliest investors, having participated in the company’s pre-series A investment round in 2016.
Established in 2015, Streami has become one of the most prominent cryptocurrency infrastructure companies in South Korea. The company operates GOPAX, a local cryptocurrency exchange that currently ranks 66th in terms of trade volumes, according to Coingecko. GOPAX 24-hour trade volumes were valued at $146 million as of Wednesda.
Perhaps most notably, GOPAX was the first cryptocurrency exchange to acquire the ISO/IEC 27001 certification and the K-ISMS certification, both in 2017, to become a registered Virtual Asset Services Provider in South Korea.
Although South Korea is regarded as one of the most active cryptocurrency markets in Asia, it also has some of the most stringent regulations. Nevertheless, the country is home to a vibrant cryptocurrency scene, as evidenced by regulators’ recent decision to greenlight a digital asset-focused fund for the first time.
As for Digital Currency Group, the venture capital firm recently announced that it is authorized to purchase up to $750 million worth of shares of Grayscale Bitcoin Trust, or GBTC, which is operated by its wholly-owned investment manager Grayscale. The company had announced plans to up its purchases of GBTC shares back in March.
