Digital Currency Group (DCG) Might Collapse Even Harder Than FTX: Here’s Why
Owing to the deplorable state of Genesis, strong opinions have spread among the public that the venture capital company, Digital Currency Group (DCG) is at a really high risk of packing up. The prediction even went further to say that DCG’s fall would be bigger and have greater unwanted effects than FTX’s collapse.
Genesis To Drag DCG Into Its Mess
It will be quite an understatement to state that the current state of things in the crypto market is not good. The truth is, it is quite worse than that.
Since a couple of days ago, when the industry witnessed the big and quite messy fallout of the FTX exchange, it has been a rollercoaster ride since then.
First off, Genesis Global Trading, a subsidiary of the Digital Currency Group (DCG), suspended withdrawals from its customers. The trading firm pegged its reason for failing on the failure of the FTX exchange and the fact that they were receiving a large number of what it called “irregular” requests for withdrawals.
However, dug-up documents revealed that Genesis Global Trading might have been in a greater mess even way before the collapse of the popular crypto exchange, FTX.
Now, here lies the problem. Following the announcement of the halting of Genesis’s withdrawals, speculation and predictions about DCG collapsing have flooded the market.
A particular prediction prominent among the rest is that of Nouriel Roubini, the chairman of Roubini Macro Associates LLC.
The well-seasoned economy popularly referred to as “Dr Doom” had taken to his Twitter page last week to state that DCG is at a high risk of packing up and that its collapse will have a disastrous effect on the price of Bitcoin.
Genesis is owed $1.1 billion by DCG.
It appears as if these predictions are not far from the truth, as information has surfaced online that DCG in fact owes about $1.1 billion to Genesis.
The source of this information can be traced to the co-founder of ArchPublic, Andrew Parish’s tweet. Andrew said that he had strong reasons to believe that the undisclosed fund is the major reason Genesis has been secretly seeking a loan from its investors.
As it is now, Grayscale is the only affiliated firm with DCG still raking in some interest, and even then, the firm has refused to disclose its proof of reserves based on “security reasons.”
Based on this background, there is no doubt that things are not as good with Grayscale as it claims, and a fall of Grayscale will undoubtedly be the fall of its parent firm, DCG.
The crypto industry has been on a quite bumpy ride for a while now and considering the new turnout of events, it appears that the journey is still quite far.
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