The crypto market is waiting for the bankruptcy of Genesis and Digital Currency Group. Will it happen?

After FTX filed for bankruptcy, Genesis Trading reported that 95% of their funds were on the American Sam Bankman-Freed Exchange, which already leads to the question of their further collapse. In this regard, a picture has emerged over the cryptocurrency market, which should sooner or later come to reality.

Genesis Trading is part of the Digital Currency Group, along with Grayscale and Grayscale Bitcoin Trust. For this reason, all of the above companies have a close relationship with each other and the impact of an event on one of them can create a chain reaction.

Do not forget about that either. that Digital Currency Group is one of the most important companies in the field of crypto-currencies, and therefore if it suffers, then such an event may indirectly affect the rest of the world of the crypto-currency market. Genesis Group, in turn, has become one of the benchmark players in the Digital Currency Group portfolio. Genesis became the first prime broker that not only provided a full range of services in the world of the crypto-currency market, but also helped to manage risks for large investors. It's ironic, but the company, which previously provided risk management services, itself was not able to cope with this in the end and now may suffer, along with declaring itself bankrupt.

Despite the fact that Genesis had already had a chance of bankruptcy before, Digital Currency Group was able to save the company from this terrible incident for some time. DCG also lent $1,200,000,000 to Three Arrows Capital after TAC went bankrupt.

Genesis Trading has experienced major financial difficulties and recently announced that they are stopping payments from the Genesis Earn program. In order to get out of a difficult situation, the company needs to find $1,000,000,000. It will be quite difficult to find such an amount, and if the organization fails to achieve its goal, then Genesis will most likely be able to declare bankruptcy.

At the same time, the relationship between Genesis and the Digital Currency Group, along with their subsidiaries Grayscale and Grayscale Bitcoin Trust, is maintained. The latter currently have 634,000 BTC in their supply, which, as a result, can be liquidated. Obviously, this turn of events creates a strong pressure on the market of the main cryptocurrency.

One of the founders of ArchPublic, Andrew Parish, agrees with the part of the audience that does not believe in the rise of Genesis Trading and Digital Currency Group. He called the chances of groups being promoted "absolutely nil". Parish's opponents in his statements were analyst Dylan LeClair, who expressed clear doubts about Andrew's competence in his words and at the same time advised members of the community to treat such words with a grain of salt. At the same time, Dylan LeClair said that if Genesis Trading and Digital Currency Group ultimately fail to recover, then this will not surprise him at all. He also added that rumors cannot be born out of the blue, and therefore it is worth watching what will happen to these investment groups.

If Genesis fails to raise sufficient funds, Digital Currency Group representatives will be forced to sell part of the shares from their portfolio. Closing the $1,000,000,000 hole on your own will be quite a challenge.

In addition, Digital Currency Group can sell not only some shares of its portfolio, but also put up for sale companies such as Coindesk, Foundry, Luno. DCG will also have to sell part of its venture capital portfolio. Adam Cochran is currently looking into whether Digital Currency Group can close the $1,000,000,000 gap, but according to Cochran, this amount is a very optimistic forecast.

According to Adam Grayscale will obviously be a priority for the Digital Currency Group. In second place in terms of priority, they will most likely put Genesis Trading and Luno will be in third place. According to the DCG analyst, the rescue will have to sell part of the capital along with its businesses and liquid assets and let subsidiaries Coindesk, Foundry and Luno go under the knife.

It is noteworthy that people who think about the possibility of a lump sum repayment of Genesis debts by the Grayscale Bitcoin Trust Company may be wrong. This is due to the fact that such a pact must be accompanied by the Securities Commission (SEC). Singapore-based cryptocurrency firm QCP Capital spoke about such a detail. Considering how the SEC is fighting Grayscale Bitcoin Trust Company, such an outcome in 2022 is unlikely.

Summarizing all of the above, we can conclude that the prospects for the Digital Currency Group and in particular Genesis Trading are very bleak. In order for the Digital Currency Group to help Genesis on behalf of the Grayscale Bitcoin Trust, the approval of the Securities Commission is required, which will not be achieved in a short time. On the other hand, Genesis is carrying $1,000,000,000 in debt, and raising that amount from outside investors is next to impossible. In order to resolve the situation for the most part, either a miracle will be shown by the community of investors who are ready to give big money for the idea of \u200b\u200bpreserving Genesis Trading, or an agreement by the Securities Commission. Thus, we will most likely see how the Digital Currency Group will save their company by reducing market positions, selling shares and getting rid of the “ballast” in the face of firms that do not bring them much income.