Digital Currency Group Sold Grayscale Treasury Stock To Raise $22 Million

Key Points:

• Digital Currency Group (DCG) has announced the sale of shares in its subsidiary Grayscale’s crypto investment funds in a filing with the US Securities and Exchange Commission (SEC).
• “This is essentially a portfolio rebalancing procedure,” DCG told the publication.

Despite the fact that the price was more than 40% lower than the initial asset, Digital Currency Group is claimed to have sold treasury shares of its subsidiary, Grayscale.

According to a Financial Times source, Digital Currency Group (DCG) has submitted a statement with the US Securities and Exchange Commission (SEC) announcing the sale of shares in its subsidiary Grayscale’s crypto investment funds. The goal of this action was to raise more money to pay the creditors of Genesis, another DCG company that had recently gone bankrupt.

It is reported that Digital Currency Group has been selling shares of the Grayscale Ethereum fund to raise $22 million in a series of transactions since January 24. It is worth noting that DCG has agreed to sell shares at a loss at a market price of just $8, while the indicative ETH price per share is $16. Nonetheless, the firm sold a modest number of shares in its Litecoin, Bitcoin Cash, Ethereum Classic, and Digital Large Cap funds.

However, a DCG spokesman told the press that “this is purely a portfolio rebalancing process.” Digital Currency Group last sold shares in the Grayscale Ethereum fund in 2021, when the price was still equal to the firm’s ETH holdings.

DCG’s “golden egg” has long been grayscale. This firm offers crypto-fund products to large institutions in the United States by purchasing and directly holding important currencies such as BTC and ETH, establishing funds, and selling fund-traded equities. At the same time, the corporation will charge investors management fees.

However, the value of Grayscale’s shares has plunged since 2021 because to a lack of investment demand, as well as the impossibility to easily convert treasury shares into crypto currencies like as BTC and ETH. The top two stocks, GBTC and ETHE, are presently down 40-50% from their initial value.

Grayscale announced in December 2022 that if it did not receive a “nod” from the SEC to convert crypto fund products into exchange-traded ETFs, it would consider repaying 20% of the fund value to investors. Shares of the Grayscale Bitcoin fund, nicknamed GBTC, are also at the center of the cross-lean loan-loan arrangement between Genesis, DCG, and Three Arrows Capital, all of whom have been impacted by the market’s liquidity problem.

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