Grayscale Bitcoin Trust (GBTC)

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Trading at 40% of NAV because parent company possibly in trouble for shenanigans.

The steady stream of bad news for DCG has contributed to downward pressure on the Grayscale Bitcoin Trust, which has seen its discount compared to spot bitcoin prices grow as high as 49% in mid-December. Friday was a very positive day for GBTC, however, as it gained over 8% on the session and was trading at $11.33 at the time of writing, with the discount rate just under 40%.

Grayscale slams SEC refusal to approve Bitcoin ETF as illogical, arbitrary, and discriminatory

(Kitco News) - Grayscale Investments just turned up the heat in their lawsuit against the Securities and Exchange Commission (SEC), attacking the regulator’s latest brief against their proposed bitcoin-backed ETF in the strongest possible terms.

www.kitco.com

See also:

Gemini-Genesis spat goes public, prompts new criminal allegations against DCG from 3AC's Zhu

(Kitco News) - Cameron Winklevoss, co-founder with his twin brother of the Gemini crypto exchange, set off the latest round of dispute surrounding Digital Currency Group (DCG) and their various subsidiaries and funds when he published an open letter to DCG founder Barry Silbert on Twitter on Jan. 2.

www.kitco.com

 

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If this crypto firm collapses, then a 'massive selling event' in Bitcoin would occur - Scott Melker

www.kitco.com

 

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Institutional crypto brokerage Genesis filed for bankruptcy late Thursday night after months of concern over the degree of its exposure to FTX and Alameda and weeks of bitter conflict with the Gemini crypto exchange whose customer assets they held.
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The move comes after yesterday’s reports that Genesis was in confidential negotiations with various creditor groups and would file for bankruptcy protection if it failed to raise the necessary capital.
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Cameron Winklevoss, who together with his twin brother Tyler owns Gemini, posted a thread on Twitter calling the Genesis bankruptcy filing “a crucial step towards us being able to recover” client assets while again taking aim at DCG and Silbert.

“The good news is that, by seeking the protection of the bankruptcy court, Genesis will be subject to judicial oversight and be required to provide discovery into the machinations that brought us to this point,” he said, adding that the filing “does not insulate Barry [Silbert], DCG, and any other wrongdoers from accountability.” Winklevoss said that they would file a lawsuit against DCG and Silbert “imminently” if they do not receive an offer they consider fair.
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Genesis files for bankruptcy as Gemini targets parent company DCG

(Kitco News) - Institutional crypto brokerage Genesis filed for bankruptcy late Thursday night after months of concern over the degree of its exposure to FTX and Alameda and weeks of bitter conflict with the Gemini crypto exchange whose customer assets they held.

www.kitco.com

 

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Circuit Judge Neomi Rao, writing the D.C. Circuit Court of Appeals' opinion, said that federal agencies are required to "treat like cases alike."

"The Securities and Exchange Commission recently approved the trading of two bitcoin futures funds on national exchanges but denied approval of Grayscale’s bitcoin fund. Petitioning for review of the Commission’s denial order, Grayscale maintains its proposed bitcoin exchange-traded product is materially similar to the bitcoin futures exchange-traded products and should have been approved to trade on NYSE Arca. We agree," she said.

The SEC did not explain why it was treating these products differently, making the Grayscale denial "arbitrary and capricious," she added.
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SEC Must Review Grayscale's Bitcoin ETF Bid After Previous Rejection, Appeals Court Rules

A federal appeals court ordered the SEC to "vacate" its rejection of the trust issuer's bid to convert the Grayscale Bitcoin Trust into an exchange-traded fund.

www.coindesk.com

 

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The Securities and Exchange Commission won’t appeal a court’s scathing reversal of its decision not to let Grayscale convert its bitcoin trust into a more investor-friendly exchange-traded fund, according to a person familiar with the matter, possibly clearing the way for the first bitcoin ETF in the U.S.

The markets regulator had until midnight Friday to decide on challenging the court’s decision, but the SEC will let that deadline come and go without appealing, the person said. ...
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It’s unclear how the SEC will proceed in its next round with Grayscale’s application. The agency still has the authority to deny it for other reasons besides the ones courts shot down, though Grayscale could challenge those again in court.
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SEC Won’t Appeal Loss in Grayscale Case, Boosting the Odds GBTC Can Become a Bitcoin ETF

Bitcoin’s price immediately shot up after the news came out.

www.coindesk.com

 

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The U.S. Securities and Exchange Commission (SEC) has opened talks with Grayscale Investments on the details of the company's application to convert its trust product GBTC to a spot bitcoin exchange traded product (ETF), according to a person familiar with the back-and-forth, which could have momentous implications for the crypto industry.
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... The U.S. Securities and Exchange Commission (SEC) has opened talks with Grayscale Investments on the details of the company's application to convert its trust product GBTC to a spot bitcoin exchange traded product (ETF), according to a person familiar with the back-and-forth, which could have momentous implications for the crypto industry.
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U.S. SEC Said to Open Talks with Grayscale on Spot Bitcoin ETF Push

Representatives of the company are answering questions from two divisions of the U.S. Securities and Exchange Commission in the wake of Grayscale's court win over the agency.

www.coindesk.com

 

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Gemini to return $1.1 bln to customers, pay fine in regulatory settlement​

Feb 28 (Reuters) - Cryptocurrency exchange Gemini will return at least $1.1 billion to customers of its defunct lending program and pay a fine of $37 million for unsafe and unsound practices as part of a settlement with the New York Department of Financial Services (NYDFS), the regulator said on Wednesday.

Gemini's Earn program, which was offered in partnership with crypto lender Genesis Global Capital, was halted during a crypto market crash in November 2022. That dislocation caused Genesis to file for bankruptcy, and has led to extensive litigation between Genesis, Gemini and Genesis's parent company, Digital Currency Group (DCG).

More:

https://www.reuters.com/technology/gemini-return-11-bln-customers-pay-fine-settlement-with-new-york-regulator-2024-02-28/

 

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I still don't fully understand the relationship between Gemini, Genesis, DCG and GrayScale. But I'm not seeing any alarming reports about this judgement affecting GrayScale so the trust, which is now the GBTC spot BTC ETF, doesn't look to be affected.

 

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Bankrupt crypto lender Genesis has completed the sale of its Grayscale Bitcoin Trust (GBTC) shares and used the proceeds to purchase 32,041 bitcoins, according to court documents filed Friday.

The sale of GBTC shares was completed on April 2, the documents show.
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https://www.coindesk.com/business/2024/04/05/genesis-completes-redemption-of-gbtc-shares-buys-32k-bitcoins-with-proceeds/?utm_medium=referral&utm_source=rss&utm_campaign=headlines

I guess that should lessen the outflows of the GBTC ETF now? It certainly looks like GBTC outflows diminished dramatically on the 2nd of April, but there aren't enough data points here to be confident in the hypothesis:

Spot Bitcoin ETF Flows

The daily flows (in USD) for spot bitcoin ETFs, including BlackRock, Fidelity, the Grayscale Bitcoin Trust, Ark Invest and more.

www.theblock.co