Struggling DCG sells its holdings in a number of grayscale trusts

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Key takeaways:

  • Digital Currency Group (DCG) is apparently starting to unload the investments it has made in the cryptocurrency funds run by its subsidiary Grayscale Investments.
  • Following a series of financial problems that had a substantial negative impact on its bottom line, The Digital Currency Group (DCG) found it difficult to maintain its operations.

In an effort to maintain liquidity and fend off demands from its creditors, the DCG reportedly started selling units of its Grayscale Investment Trust earlier this week, according to a piece published by the Financial Times.

With its lending unit Genesis declaring for bankruptcy proceedings and owing creditors at least $3.4 billion after being knocked out by a market crash that also affected exchange FTX and lender BlockFi, troubles have mounted for DCG, which is supported by SoftBank Group Corp 9984.T.

Recently, Genesis Capital, a division of Digital Currency Group (DCG), filed a new class action lawsuit against DCG.

Genesis creditors filed a securities class action (SCA) lawsuit against DCG accusing DCG and its CEO Barry Silbert of breaching the law.

Sources verified that the financial giant had so far sold nearly a fourth of its interests in the Grayscale Ether Trust for about $8 per share, despite the fact that each share has a claim to almost twice that amount in Ether, according to securities filings issued in the United States.

Barry Silbert founded DCG,  is also the parent business of media outlet CoinDesk, asset manager Grayscale Investments, and crypto loan service Genesis.

The trust issuer’s purported sale at such a significant discount, according to financial futurist Dave Nadig of the analytics business VettaFi, emphasises the necessity for a redemption period. Share redemptions for ETHE are not currently permitted.

DCG sold its stakes in a number of investment entities managed by its Grayscale subsidiary. This action draws attention to the financial challenges that DCG is encountering as it seeks to borrow money to support its failing lending units and maintain its most “cash-generative business”.

DCG was cited as saying that when questioned about the share sales, it “is just part of our regular portfolio management.”

To maintain liquidity in 2023, DCG has taken a variety of actions, such as notifying its shareholders in a letter dated January 17 that company would cease paying quarterly dividends in order to fortify its balance sheets.

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Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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