Topic: Everything you wanted to know about Grayscale BTC Trust but were afraid to ask! - page 15. (Read 16372 times)

when it comes to genesis bankruptcy. i am not interested in who genesis owes. as those are now creditors. locked into waiting for the courts to shuffle funds about and pay out. thus slow news taking months to effectuate

what is more interesting is who genesis has given loans to and invested in. because if there are any companies that took value from genesis could see the administrators claw back that value before the prescribed term dates. meaning then affecting other companies suddenly needing to find funds to give back to genesis

As Bloomberg has learned, nevertheless, the Genesis cryptocurrency lender, as well as its subsidiaries Genesis Global Capital LLC and Genesis Asia Pacific Pte, could not resist and they filed for Chapter 11 bankruptcy in the Southern District of New York.
We can talk about the amount of up to $10 billion for both assets and liabilities, and for more than 100,000 creditors, this 50 unsecured claims amount to about $3.4 billion.

Source: https://www.bloomberg.com/news/articles/2023-01-20/crypto-lender-genesis-files-for-bankruptcy-as-crisis-spreads

well its not "sec" its a court of appeals. so its kind of he last leg of arm twisting and final verdict on decisions.
atleast by that date soon after feb 3rd its a more tangible bit of clarity about where grayscale sits in the chances of a EFT being accepted

if not then grayscale and all other "trusts" need to go back to the drawing board of how they set up their trust contracts and organisation. becasue obvious current generation of template they are proposing doesnt fit the SEC demands

however if it is allowed then all other companies can start making their "trusts" using the same template becasue they then have a precedent to follow

Fascinating analysis. But I wouldn’t hold my breath for the SEC decision. I really cannot see them changing their stance, so far. I do hope being wrong, of course.

looking more into the "valkerie" stuff i started looking into a fortnight ago (i know im slow on this one)

so valkerie mainly funded/owned by Justin sun

justin sun made a tender offer of his own personal wealth of $1b to finance DCG/grayscale to do the share dissolution(buyback) which means justin sun would end up with the $2b of btc that get unlocked.
(though grayscale/dcg may also just self/elsewhere fund that option and not use justin sun)

and separately justin sun(via his majority ownership of valkerie) made another offer to grayscale to want to invest under $6b(share value not asset value) to become the sponsors of the trust and just take grayscale out of the equation of the GBTC trust

so it turns out although brand valkerie was just a IT technology company a few years ago. justin sun is the head guy backing valkerie to become a hedge fund

i did see all the pieces a fortnight ago, but didnt put the effort to stitch it al together until now

lets see which deals playout after DCG(grayscale) get another answer from the appeals judges "shortly after feb 3rd"

share holders do not own the trust
NO ONE DOES
thats the point of trusts

they have trustees(managers/sponsors) that control value going in and out

the shares are 'advisory' shares of the sponsor. not stock options(ownership certificates) of the trust collateral

share holders can vote on the contract terms. and change them
but they are not owners nor "owed" btc

its not going to be a redemption because the SEC has continually said "no". and its this that grayscale are fighting
all grayscale can do is sell shares for fiat at the share rate and void said shares

this can unpair/untether some btc inside the trust. but that is not then to be distributed to ex shareholders. its to go back to the "sponsers" (grayscale/DCG)
or more likely just re-jig the pairing where it moves the 'btc per share' from 0.00091 to 0.0014

---

the whole SEC /ETF debacle is that by saying no. the SEC is not letting people have ownership of btc.
meaning no "redemption"

all that can be offered is a tender(fiat) buyback of shares to cut down how many advisory shares are available

Not all users can backread those 34 pages just to read the previous discussion. I take my chance to ask questions since this is a QA thread and it will be more efficient to do so. This is why I put this postscript "I didn’t know if this question is already asked here. Just refer me to the answer if there is." before I start my post. I read the OP and it gives me a lot of info about Grayscale so I ask a question that is not listed in there. Sorry if I trouble you with repetitive questions. Maybe put some previous Q&A on the OP so that new readers can easily grasp the info about the common questions?



Do all the shareholders decide on what token will be purchased using the money they trust to Grayscale or Grayscale gives a proposal on for shareholders to vote if they will buy or not? I'm working in the insurance sector so I want to know the flow of how Grayscale acquired

the annoucement last month

tender offer... tender =fiat
of the shares
of the shares

it is NOT about opening up a redemption program (its NOT a 1x value share for 2x value btc offer everyone salivates over)
it IS just a share buyback. (reduce the pool of shares by 20%)

in short bringing the number of shares from
692,370,100
to
553,896,080

I have read differently. So I guess until this proposal isn’t launched with a proper offer and term sheet, we will continue discuss about this (or we better stop doing so until we know more with certainty!)

it doesnt work like that. as thats backwards.

ever since post #649 you have been obsessively hoping that its some kind of ability for shareholders to win/get/receive bitcoin in exchange for shares... and multiple times including quotes i have said and shown that is not the case

heres the two options
(neither involve share holders(customer) getting BTC)

using FIAT... greyscale buys back the shares AT SHARE PRICE.. end of story for the share holder.. bye bye they are gone with their fiat..

ex shareholders walk away with fiat at the SHARE rate.
20% of share holders escape

those 20% shares are destroyed.

this legally THEN untethers nearly 20% of BTC of the trust(for grayscale/dcg to do with as they please as they fronted the fiat).

a. where they can leave the coin in and rebalance the remaining shares to be less "discount"
 
b. they take out the BTC to use internally for DCG issues.. becasue its not part of the "share product"

again forget this proposal being a "share holder btc redemption" its not.
its a share buyback.. not a give btc to shareholder thing

I guess the “sale” of the Bitcoin in the trust will be necessary to fund the repurchase. They are using those funds to repurchase the shares, possibly using some kind of temporary bridge loan.

to clarify a bit further

legally no one owns the trust. as thats the point of one.. it acts as self entity with rules. where the rules define who manage it
there are trustees who are responsible (and re-sponser-able) for the management of the trust
and they designate what goes in or what comes out based on the rules and contract of the trust (who the beneficiaries are and when a payout can be made)

as a trustee(sponsor as grayscale call it) they have 'rules' to follow and as trustee/sponsors.
the trustee aka sponsor is currently grayscale. and separately grayscale have a "product" that they sell as shares (separate from trust ownership) that represent X amount of value inside the trust. as a measuring stick of responsibility. but not ownership of said value
(its 'advisory shares' not stock ownership stake(advisory shares are not allowed to be 'stock' yet (research the whole SEC drama))

they sell that responsibility(advisory) in a form of shares. meaning people can 'vote' using their shares to change the contract or change the sponsor managing the trust but at this point not own the btc inside the trust.


grayscale do not want to do or propose for a vote of a redemption program(shares for coin). they want to offer a 'buyback' repurchase of share program(fiat for shares)
meaning dollars to buy back shares.. which means grayscale as sponsors can then untether the btc in the trust as no shares associate to it. and thus either remeasure the remaining share against the trust collateral to raise the shares to be at less discount. or just yoink the btc out to use for other grayscale business.. we may find out at 23rd when grayscale file their next SEC deadline response

These facts have been repeated many time but it seems that many people still are not aware that Grayscale does not own the BTC in GBTC, nor can they sell the bitcoins in GBTC.

The Grayscale Bitcoin Trust is a trust. It is a separate entity that it managed by Grayscale, and it pays Grayscale a management fee of 2% per year. The bitcoins in the trust were deposited in exchange for shares in the trust. Grayscale does not own the bitcoins in the trust. The trust owns the bitcoins. Grayscale does not own the trust. The shareholders own the trust. Not accurate.

The bitcoins in the trust were deposited in exchange for shares in the trust. While Grayscale deposited the initial bitcoins, they certainly did not deposit all of the bitcoins. However, Grayscale did have convenience option in which they would purchase the bitcoins to be deposited for the customer.

The structure of the trust currently does not allow the bitcoins to be sold, lent, or used as collateral. Grayscale cannot sell the bitcoins in the trust.

1. OTC(off market over the counter), mining, company acquisitions(collateral swaps) mainly
2. small amounts. most of it was bought/acquired over many years
3. its spread over many addresses which coinbase has custody of the wallet
    someone did try to track them. heres his tweet thread https://twitter.com/ErgoBTC/status/1594308382084812801
4. nope, they will announce a share buy back first before touching the coin
5. they have to buy back the shares first. to unlock the reciprocal amount of btc the share represents
6. they would use OTC

I didn’t know if this question is already asked here. Just refer me to the answer if there is. Where exactly did Grayscale purchased there Bitcoins and are they still accumulating up to this point? Does there Bitcoin address is available for there investors to monitor company holdings?

Lastly in case that Grayscale will decide to already sold there holdings. Will they do an announcement to the public right after the sell off commence? And will they use exchange?

I had to use the reproduction of the article from the archive since FT is distributed by subscription https://archive.ph/R8Dd1

Of course, the situation with Genesis debts is largely complicated by the SEC's lawsuit against Gemini and Genesis, but perhaps Justin Sun's statements about her willingness to spend up to $1 billion to purchase DCG assets will somehow defuse the tension.

there are 3 main types of outstanding loan statuses
loans payable non-current(more then a year)
loans payable current(within a year)
loans in default(overdue/unpaid)

i consider the third as DEBT

loans can just sit on balance sheets as liabilities and be swapped around and stuff
but true debt, means you are being chased because your not sticking to arrangements or not paying obligations

its like mortgages. people dont see it as debt. they see it as an agreement with the bank.. its not until the debt collectors come knocking that they start to sweat

I very much disagree. It is normal for companies to have debts as long as the company has the cashflow to pay for the monthly interest payments and have the collateral to back up the loan. What is not good is if the company, very much similar to DCG, has payables that they are not willing to honor and the lender has began accusing the company of public lies, private lies and bad accounting practices.

According to the Financial Times, Genesis Global owes $3billion to creditors.



Crypto broker Genesis owes creditors more than $3bn, prompting its owner Digital Currency Group to explore selling assets in its large venture portfolio to raise money, according to people familiar with the matter.

Source https://www.ft.com/content/eb22bfab-ef05-48ce-83de-ebb904a35dca



Everyone can call me an antagonizer, however, this pump on bitcoin might not keep going. The dump will occur unless Barry's problem is settled.

a company with any debt is bad.. it shows they are not profitable/self sustainable

a company that (based on 10.5bill assets for demo) is only able to take a 2% cut ($210m) a year which it splits with its "mother" DCG
where DCG has debts of more then a billion.. means "mother" is in trouble (less yearly income compared to outgoings)

DCG EBITDA is less than $1b
after taxes and costs its alot lot less then that.

DCG should not be doing loans/debt deals of more yearly payment demand than its post-tax income

Even that Silbert letter that Franky showed in his above post shows that Silbert may well not be blinking and may not even need to blink if he is not in default in any of the payments, then there might not be any standing that anyone (including Gemini or the Winklevii) has to force a bankruptcy proceeding.. and perhaps Silbert has to miss a payment first?

That is a pretty damned BIG set of payments that seems to be due in May 2023... but there still might be ways that payments are able to be made, and so even if Silbert and DCG have been receiving a lot of negative public pressure and even tanking of the market price of the shares (which they seemed to have had taken advantage in buying those dips, too), they still may well have the upper hand in this whole seeming squeezing of a mess..

We really cannot know for sure that they are not able to pay unless or until they actually miss a payment or if there may be some ability for larger amounts of any of their loans could be called in at some kind of an earlier date.. and of course, there could be some votes of shareholders that could force DCG and/or Silbert into a direction that they do not want to go, but it might not be legally possible to call in any of those loans, unless Silbert/DCG actually misses a payment or is otherwise in default.. .. so if they (Silbert and/or DCG) are actually in materially significant default somewhere, then that would be an interesting fact to know.

PS. I think that much of our recent discussion regarding Silbert/DCG's hand being forced by various civil proceedings and/or inabilities to pay or to service debt... Yet, there may well be various unknowns involving some of the recent criminal angles that have been pursued in recent times - and if there are financial crimes, sometimes it can take a decently long time for those to be figured out - but we have some folks who had been recently arrested that could potentially want to squeal to reveal some of the behind the scenes shenanigans to be more than just inabilities to match up order books .. like they want to describe as liquidity crunches.. . but if some criminal angles end up coming to light, that could throw some monkey wrenches in Silbert/DCG's so far successful delay tactics.. I am not saying that I know anything beyond the mere complications of various FTX arrests and the likelihood that several more high level financial crime folks should be arrested who had been playing some of the products (surely maybe just on the market and perhaps with no complicity from Silbert/DCG - even though they admit to be buying their own shares, too.. so there could be manipulation involved including possible criminal level manipulation.. which might be a stretch to proclaim without evidence) but are still on the loose.

Edited about 8 hours after original post to add PS