Topic: Everything you wanted to know about Grayscale BTC Trust but were afraid to ask! - page 16. (Read 16372 times)

No one should want to trigger bankruptcy proceedings if they can get a better resolution prior to forcing that kind of a filing... Gemini and some of the other creditors likely have enough clout (meaning outstanding debt that is not being serviced) that they have standing to force a bancrupty proceeding.. but then the whole thing could end up taking years and years and years to resolve and surely would not work to their (Gemini's) favor either.

We all likely realize that Silbert and company is milking this uncomfortable situation.. and if they can delay any kind of forced resolution for a year or two, then Silbert and company would still be able to make profits the whole time that everyone else is suffering... and the matter ends up resolving itself.. meanwhile all the creditors are suffering and some of them are suffering more than others... and Silbert and company ends up suffering the least because of his ongoing stalling...  

So yeah.. Gemini and some others have that forced filing card that they can play.. and Silbert is seeming to ongoingly gamble that they won't play it.


The market is starting to seem to show that at least it is perceiving that the situation is not as bad as previously thought.. whether the market is correct is not an easy call, either... unless we can point to some solid resolution that shows that something materially has changed...  

Read that market.

Is it right or not?

In any case, after everything we have witnessed with Barry, he should have bought only Bitcoin and Ethereum during 2016 and held them instead of pumping Ethereum Classic and those other altcoins. He also caused his own problem by creating funds that cannot be redeemed and other schemes for all of those altcoins.

DCG Shareholder Letter from
Barry Silbert, Founder & CEO
Published 2:00pm EST, Tuesday January 10, 2022

Dear Shareholders,

Happy New Year.  I’ve been reflecting quite a bit recently about the past year, the state of the industry, and where things go from here.

First, I’m incredibly proud of the role that DCG and I have played as pioneers and builders over the past 10 years.  Since our founding, we have invested in more than 200 companies that have developed and shaped the industry, and we have helped build the first publicly-quoted BTC fund, the largest asset manager in the space, the most influential crypto media platform, the #1 bitcoin mining pool in the world, the leading crypto prime broker, and a dominant crypto wallet/exchange in the emerging markets.  DCG has also backed a tremendous group of emerging fund managers, crypto protocols, and cutting-edge blockchain projects.

I have fond memories of the early days of our industry, working hard to help educate and fighting in the trenches with fellow entrepreneurs and investors to gain legitimacy.  Speaking at conferences to rooms with three people, getting snickered at on CNBC, and being dismissed by most legitimate investors was, I found, empowering and motivating.

In contrast, this past year has been the most difficult of my life – both personally and professionally.  Bad actors and repeated blow-ups have wreaked havoc on our industry, with ripple effects extending far and wide.  Although DCG, our subsidiaries, and many of our portfolio companies are not immune to the effects of the present turmoil, it has been challenging to have my integrity and good intentions questioned after spending a decade pouring everything into this company and the space with an unrelenting focus on doing things the right way.  

I shared this sentiment in my previous shareholder letter this past November: DCG is committed to remaining at the forefront as we strive to build a better financial system.  As this new year unfolds, we are hunkering down with our “lean and mean” mindset, and we are making meaningful changes to position the firm for long-term success.  We’ve been aggressively cutting costs over the last few months in reaction to the current state of the market, which has included cutting operating expenses, and regrettably, reducing the DCG workforce.  We also made the difficult decision to wind down HQ, the wealth management subsidiary that DCG incubated in 2020.  While we still believe in the HQ concept and its outstanding leadership team, the current downturn is not conducive for the near-term sustainability of that business.

Looking ahead to 2023 and beyond, the industry has a lot of hard work to do to re-establish its credibility and reputation, which have been all but destroyed by a wave of unprecedented fraud and criminal behavior unlike anything I’ve seen in my career.  This is going to be a challenging year for all of us, but I remain optimistic.  I hope this letter and the accompanying Q&A that explains other developments and addresses some of the speculation about DCG – some of which is reasonable and some that is completely baseless and false – help to clarify our position.

To my peers in the trenches, now is a time to collaborate, cheer each other’s successes, and collectively take our industry to the next level.  Let’s all grow together, treat others with respect, and get back to having fun and making a dent in the universe.  I can assure you that DCG is certainly committed to doing so.  I also have no doubt that DCG will emerge from this year a stronger company than ever before.

7.
DCG currently owes Genesis Capital (i) $447.5M* in USD and (ii) 4,550 BTC (~$78M), which matures in May 2023.

DCG borrowed $500M in USD between January and May 2022 at interest rates of 10%-12%.


DCG’s investment entity borrowed BTC during 2021 and 2022 at a weighted average interest rate of 3.85%, which include amounts previously borrowed that have since been repaid to Genesis Capital, leaving the current 4,550 BTC loan balance.  

To put these loans to DCG into context, at the time they were issued in early 2022, DCG’s equity was valued at $10.0B, DCG’s trailing twelve-month EBITDA was in excess of $1.0B, and Genesis Capital’s aggregate loan book size ranged from $12.0-$15.0B.  BTC prices ranged from $30.0K-$47.0K during this period.

DCG has not borrowed from Genesis Capital since May 2022, has never missed an interest payment, and is current on all loans outstanding.

9.
9. How did DCG’s investment entity use the BTC borrowed from Genesis Capital?
DCG’s investment entity used the BTC borrowed from Genesis Capital to hedge GBTC long positions to remain market neutral on such positions.  DCG’s open market purchases of GBTC were made when GBTC traded at a meaningful discount to NAV and, like all other investments, these decisions were based on an assessment of the likely returns weighted against the risks.  Our purchases of GBTC on the open market have been in compliance with Rule 10b-18 under the Securities Exchange Act and transparently disclosed in filings and press releases.

10.
10. What is DCG’s relationship with FTX?
DCG made a small equity investment of $250,000 in FTX’s Series B in July 2021.  This was part of our ongoing strategy to invest in exchanges all over the world – we’ve invested in close to two dozen.  DCG held a trading account with FTX with less than 1% of all our trading volume transacted on that platform.

I'm curious what Gemini are hoping to achieve with an out-of-court settlement.  It's not as though they don't have the funds for a lawsuit if their case is as strong as they claim.  Is it just that they want it resolved quickly?  Or do they think the deal will be more lucrative without lawyers involved?

Maybe they already obtained a result:

Well, if management start thinking Silbert leaving could narrow the discount, well I can see Barry staying at the helm too long.

I'm curious what Gemini are hoping to achieve with an out-of-court settlement. 

Cameron Winklevoss goes on with his power struggle with DCG. He’s now asking the board of directors asking to oust Barry Silbert.
(...)
He cites various accusations, without providing too much evidence.
I doubt action will follow. But the point of getting DCG out of the dirt it's flying over various exchanges nowadays.

To be perfectly clear: the $BTC underlying Grayscale Bitcoin Trust are owned by $GBTC and $GBTC alone.

These options could include a tender offer for a portion of the outstanding shares of GBTC. We currently expect that such tender offer would be for no more than 20% of the outstanding shares of GBTC.

their reason to do this is to use less money to get the coin

imagine december was 50% discount
it means they have to pay $5.3b to do a 100% buyback,
     meaning a 0.53b 10% buyback for 1.06b worth of coin release to them
     meaning a 1.06b 20% buyback for 2.12b worth of coin release to them

if they can wait out for more discount.. say 55% discount, instead of paying out 1.06 for 2.12 release
they would only pay $4.77b to do a 100% buyback,
     meaning a 0.477b 10% buyback for 1.06b worth of coin release to them
     meaning a 0.954b 20% buyback for 2.12b worth of coin release to them

thus a better deal for them
if discount went up to 55%
instead of paying 1.06 they pay out 0.954
saving THEM $106million by waiting for 5% more discount

Mah I have lost you here.
their incentive, when doing this kind of operation is for the discount to go down, not up.
They are offering to buy back a share at NAV level, irrespective of the market price.
They are paying 1 Bitcoin for every 1 bitcoin amount of shares, currently trading at roughly 0.5 bitcoin.
So they are spending 1 bitcoin whatever the market price. If market price is closer to 1 bitcoin (discount decrease) their final Mark to Market is less negative.

Either I didn't interpret your post correctly or I didn't get the whole operation correctly.

however DCG doesnt want to pull the trigger now. they want to wait out as much as possible for the "discount" so that they dont have to pay out as much on the shares to unlock more of the asset

in other news
the winklevi are getting very itchy feet trying to chase after DCG

https://twitter.com/cameron/status/1609913051427524608/photo/1
https://twitter.com/cameron/status/1609913051427524608/photo/2

I didn't know the backstory of Valkyrie. Nothing wrong about changing the firm mission (Hey, did you hear Microstrategy is now a bitcoin company?).
But I do agree on the background check when required for investing. Dear old due diligence.

never invest a "minimum $1m per investor" into a brand with no funding to even lease a proper office

the nasty thing is....
valkeries "business address" (320 seven springs way brentwood) is a virtual address(modern po box)