There is increasing pressure on Grayscale and the Digital Currency Group (DCG). In addition, customers of Gemini Earn have filed a class action lawsuit against both firms, and the Winklevoss twins have given DCG until Jan.8 to restore the $900 million in client cash.
BTC, ETH, LTC represent DCG and Grayscale’s largest holdings
As people know, Grayscale owns a sizable quantity of bitcoin as part of its GBTC, more than 630,000 BTC, generating many investor concerns. The corporation owns two cryptos that account for an even more significant portion of the market cap than the more than 630,000 BTC, which “only” comprise 3.28% of all bitcoins in circulation.
A remarkable 8.53% of ethereum classic (ETC), or almost $189 million, is held by Grayscale in its various trusts. Horizen comes in second on the list (ZEN). The percentage of the market capitalization is 4.64%, or roughly $5.7 million.
With 2.53% and 2.52%, respectively, of zcash (ZEC) and ethereum (ETH), Grayscale also has a colossally high percentage in both cryptos. Following them are MANA (1%), litecoin (2.11%), and bitcoin cash (1.6%).
The company, run by Michael Sonnenshein, might be selling off some of its altcoin trusts to save its flagship product, the GBTC, the Grayscale Ethereum Trust (ETHE), and the entire Digital Currency Group. As mentioned above, this is the leading cause of worry for crypto investors that Silbert could use the money to pay off his debts.
Given the enormous stakes in the market, it would be difficult to completely rule out the chance that the already underperforming altcoins would suffer significant losses due to a Grayscale dump.
Horizen is trading 94.44% below its record high of $168.15, while the price of ethereum classic is 90.85% below its high of $176.16. Zcash, which has fallen the most by 99.36% from its record high of $5,941.80, has experienced the greatest loss.
Grayscale is looking for an easy way out of dissolving their Trusts
One can only surmise whether all of the trusts will be dissolved or part of them. Grayscale’s CEO, Michael Sonnenshein, has underlined numerous times over the past few weeks that the company has no plans to dissolve the GBTC fund.
Despite that, he previously mentioned the possibility of returning up to 20% of GBTC’s capital to shareholders if he cannot make the product into an exchange-traded fund.
But there are significant legal obstacles. It’s crucial to remember that Grayscale is subject to SEC regulation. That means Greyscale must inform SEC of its intention to dissolve its trust funds, which is a lengthy and challenging process.
However, as the SEC case against Ripple and the subsequent dissolution of the XRP trust show, it is possible.
A project at Grayscale has minimal risk but tremendous reward. However, the recent changes have significantly increased the strain on Grayscale and DCG. Due to the linkages created by the loans between the two businesses, the parent company’s failure could affect the cash cow Grayscale.
The fact that not all coins are lost at once should be emphasized, nevertheless, when there is a downturn. Not all investors in Grayscale would likely desire to sell if a Reg M solution existed. The progression of the DCG/Grayscale drama should, therefore, be closely watched by investors.