FTX Contagion Reaches Grayscale? Are GBTC, ETHE Next FTT?

Crypto brokerage firm Genesis Trading facing potential solvency issues. A call with creditors is scheduled for tomorrow at 8 AM EST in which Genesis may explain the current situation, FTX exposure, and relations with Alameda Research. If the rumors are true, the firm may dissolve the GBTC and ETHE trusts to pay back their lenders. Digital Currency Group (DCG) is the parent of Genesis and Grayscale.

Is Genesis, Grayscale Next Amid FTX Contagion?

The collapse of FTX and Alameda Research fueled the contagion effect causing several crypto companies to face financial and withdrawal issues, with some planning bankruptcy protection.

Genesis Trading is also rumored to be facing solvency issues. Genesis interim CEO Derar Islim will host a client call on November 17 at 8 AM EST to discuss the state of crypto markets and Genesis’ lending business. Some believe the company may dissolve GBTC and ETHE to pay back their lenders. The situation will be more clear tomorrow.

Autism Capital in a tweet asserts that Grayscale controls GBTC and ETHE trusts, not Genesis. However, Digital Currency Group, the parent company of Genesis and Grayscale, is supporting Genesis. Moreover, a solvency issue may force DCG to dissolve the trusts due to financial issues.

As part of transparency, Genesis Trading reported that it has $175 million in locked funds in FTX trading account, but no material exposure to FTX. As a result, DCG provided $140 million in equity infusion to Genesis.

Grayscale’s GBTC and ETHE Status

Grayscale’s GBTC hit a 41% discount amid the FTX crisis. Cathie Wood’s Ark Invest recently purchased Grayscale Bitcoin Trust shares worth $2.8 million. According to Coinglass data, GBTC’s total holdings stand at 633.64 BTC worth over $10 billion. At the time of writing, GBTC premium is at -37.08%.

GBTC Holdings and Premium Rate. Coinglass

Meanwhile, ETHE has also hit a record low amid the FTX collapse. Currently, it is trading at a -34.47% premium rate, as per Coinglass data.

ETHE Holdings and Premium Rate. Source: Coinglass

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