Joshua Henslee released a video detailing the timeline of events shaking the digital currency space since FTX imploded. He covers what’s happening with Genesis, Grayscale, Digital Currency Group (DCG), and Coinbase (NASDAQ: COIN), and what it might mean for the future.
A timeline of recent events
Henslee opens with a walkthrough of events as they have occurred in recent times.
FTX collapsed around Election Day, November 9, causing a ripple effect with Genesis Trading, the Grayscale Trust, and Coinbase.
As a result, Genesis Trading said it had lost $7 million. The following day, November 10, they said they had lost $175 million locked into a trading account on FTX. Digital Currency Group, the parent company, gave them $140 million+ dollars of liquidity the next day.
On November 11, rumors broke that Coinbase CEO Brian Armstrong had sold 30,000 shares in his company for $1.6 million.
Skipping forward to November 16, Genesis announced that it had suspended new loan originations and redemptions, citing the FTX debacle. On the same day, Gemini Earn announced that it could not fulfill all withdrawal requests due to extreme market conditions.
That same day, Grayscale stated that it could not do proof of reserves for the 635,000 BTC it allegedly holds for “security reasons.” The next day, the Wall Street Journal reported that Digital Currency Group, which also owns Grayscale, was seeking a $1 billion loan.
On November 20, Coinbase 2028 bonds were trading at US$0.50 to the dollar. The next day, Coinbase Custody vouches for the 635,000 coins Grayscale is supposed to have, saying it holds them in custody.
However, despite this reassurance from Coinbase, the following day, the Grayscale Trust hits a record discount of nearly 50%.
Rumors soon followed that Digital Currency Group was slashing the amount it sought as a loan in half to $500 million. Coinbase shares traded at an all-time low on the same day.
Analysis and commentary from Joshua Henslee
“I don’t see how anyone can look at this and think it’s a good thing,” Henslee says, beginning his commentary and analysis of the situation.
Furthermore, he says he finds it “incredible” that we’re in the blockchain/distributed ledger technology space, yet nobody is using this technology to instill consumer confidence by proving what they’re holding in various wallets. He isn’t buying the “security risk” excuse for not publishing addresses. He thinks it implies that these coins aren’t there.
“I don’t understand why they don’t just sell BTC to fix the discount,” Henslee says, speaking about the Grayscale Bitcoin Trust discount. He also notes that Digital Currency Group Chairman Barry Silbert has been very quiet recently, and that’s not a good look right now.
What does it mean that Coinbase bonds are trading at 50 cents on the dollar? Henslee points out that there’s no reason for anyone to hold coins in Coinbase, given the risks and the fact that even their CEO is dumping stock as quickly as he can.
Key takeaways from this Joshua Henslee video
- There’s trouble brewing with the big players in the digital currency industry in the wake of the FTX implosion. Names like Genesis, Gemini, and Digital Currency Group are allegedly struggling financially.
- It’s deathly quiet, with no CEOs coming out to reassure markets. Barry Silbert has gone radio silent as rumors circulate that his firm is seeking a $500 million loan after being rejected for a $1 billion loan by everyone in the industry.
- Coinbase CEO Brian Armstrong is dumping stock while his company seeks to reassure the market that it holds the Grayscale Bitcoin Trust coins. Its 2028 bonds are trading at all-time lows.
- Things aren’t looking great for the wider industry. If a company like Digital Currency Group imploded, it would have catastrophic consequences for the entire digital currency space as we know it.
Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple,
Ethereum, FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.
