The ongoing liquidity issues facing Genesis Global Trading and its parent company Digital Currency Group (DCG), have led many crypto traders and enthusiasts to speculate whether their financial woes will affect another DCG-owned company, Grayscale Investments.

The latter is a Wall Street firm that provides several crypto-linked investment products that allow investors to buy shares representing a fraction of a digital asset. For example, one share of the Grayscale Bitcoin Trust represents 0.00091292 BTC.

This allows investors to invest in cryptocurrencies without worrying too much about the risks and challenges of buying, storing, and safekeeping the digital assets themselves.

Grayscale s Holds 3.28% of Bitcoin’s Total Supply and 2.54% of Ethereum’s

It is with this background and the anxiety on whether Grayscale will dissolve its cryptocurrency trusts to bail out Genesis and DCG that the team at WuBlockchain has pointed out that the Wall Street firm holds 3.28% of Bitcoin’s total supply and 2.54% of Ethereum’s.

Wu Blockchain on Twitter: "At present, Grayscale holds about 632,000 BTCs worth about US$10.5 billion, accounting for 3.28% of the BTC market value, and the current premium rate is -45.17%; holding more than 3.03 million ETHs worth about US$3.6 billion, accounting for about 2.54% of the ETH market value. / Twitter"

At present, Grayscale holds about 632,000 BTCs worth about US$10.5 billion, accounting for 3.28% of the BTC market value, and the current premium rate is -45.17%; holding more than 3.03 million ETHs worth about US$3.6 billion, accounting for about 2.54% of the ETH market value.

Data from OkLink further shows that Grayscale also owns 8.50% of Ethereum Classic’s total supply, 2.12% of Litecoins, 1.6% of Bitcoin Cash, 2.07% of ZCash, 4.63% of Horizen and other digital assets as seen in the screenshot below.

Grayscale’s crypto holdings. Source: OKLink

Genesis Creditors Will Push for Bankruptcy and Claim DCG’s Assets — Su Zhu

As earlier stated, the size of Grayscale’s crypto bags has been a topic of discussion on crypto Twitter, given that its parent company DCG and sister-company Genesis, are experiencing liquidity issues that have also affected customer redemptions at Gemini’s Earn program. Genesis owes Gemini customers an estimated $900 million.

DCG’s financial situation prompted the input of Three Arrows Capital’s Su Zhu, who forecasted that Genesis creditors (including Gemini) will push the company into bankruptcy ‘and take the remaining DCG assets in the coming days.’

DCG Will Likely Cut Costs Through Lay-Offs — Lumida CEO

However, in a similar commentary, Ram Ahluwalia, the CEO of Lumida Wealth Management, thought that DCG would likely lay off a significant portion of its workforce to cut costs to generate additional cash flow to prevent or stall a Chapter 11 bankruptcy.

Mr Ahluwalia also provided another solution in DCG’s creditor committee, inviting a VC or private equity firm ‘to join the creditor side of the table’ to inject new capital to solve these issues.

Another solution would be closing the discount on Grayscale’s investment products, thus creating a significant gain in DCG holdings.

‘The only get out of jail free card (which won’t happen but is cope): The discount to NAV gap closes. This would create a $500 MM gain in the value of DCG holdings — enough to satisfy Gemini Earn [and/or] the Fed pivots and the price of bitcoin somehow gets back to ATHs,’ Mr Ahluwalia explained.

(by John P. Njui)