Crypto conglomerate Digital Currency Group (DCG) has begun to sell shares in several of its crypto funds at a discounted price, especially shares of Ethereum Trust to raise capital to pay back creditors of its defunct lending arm, Genesis, as reported by Financial Times.
According to US securities filings seen by the Financial Times, DCG has started to offload holdings in several investment vehicles managed by its subsidiary Grayscale.
Ethereum Trust: A Quarter Sold at a Steep Discount
DCG’s recent share sales have centered around the Ethereum Trust, where it has moved to sell about 25% of its stock to raise as much as $22 million since January 24th.
The company sells each share for approximately “$8, despite each share’s claim to $16 of Ethereum. Grayscale, DCG’s subsidiary, earns a 2.5% management fee on the 3 million Ethereum in the trust, and this equates to $209 million in the year to September 2022.
DCG is selling shares in its funds due to financial difficulties. The goal is to preserve its most profitable business and raise funds to support Genesis. Genesis collapsed into bankruptcy in January.
The move is part of DCG’s ongoing effort to repay its creditors, who are owed over $3 billion and resolve a public dispute with the Gemini exchange over debts. In addition to divesting from ETH, DCG is also seeking to sell its trade news site CoinDesk and some of its $500 million venture portfolio.
The group reaches an agreement with Genesis creditors, including Gemini. The sale of ETH holdings is a crucial step toward recovering assets. DCG has commented that the sale of Ethereum holdings is simply part of its ongoing portfolio rebalancing. Related Reading | Tether’s Reserve Report: Assets Surpass Liabilities As BDO Confirms Accuracy The company sold shares in the Ethereum Trust in 2021 when its trading was close to its net asset value. Since then, the shares have dropped to half the worth of the Ethereum they represent.
DCG is selling off a portion of its Ethereum holdings at a discount. This highlights the financial struggles the company is facing after the collapse of Genesis. The sale is to raise funds and repay creditors. It is also a larger effort to rebalance the company’s portfolio.