Everything you wanted to know about Grayscale BTC Trust but were afraid to ask!

[franky1]

its a share buyback not a give btc to shareholder thing

I have read differently. So I guess until this proposal isn’t launched with a proper offer and term sheet, we will continue discuss about this (or we better stop doing so until we know more with certainty!)

the annoucement last month

These options could include a tender offer for a portion of the outstanding shares of GBTC. We currently expect that such tender offer would be for no more than 20% of the outstanding shares of GBTC.

tender offer... tender =fiat
of the shares
of the shares

it is NOT about opening up a redemption program (its NOT a 1x value share for 2x value btc offer everyone salivates over)
it IS just a share buyback. (reduce the pool of shares by 20%)

in short bringing the number of shares from
692,370,100
to
553,896,080

[1714200319]

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[Wapfika]

I didn’t know if this question is already asked here. Just refer me to the answer if there is. Where exactly did Grayscale purchased there Bitcoins and are they still accumulating up to this point? Does there Bitcoin address is available for there investors to monitor company holdings?
Lastly in case that Grayscale will decide to already sold there holdings. Will they do an announcement to the public right after the sell off commence? And will they use exchange?

These facts have been repeated many time but it seems that many people still are not aware that Grayscale does not own the BTC in GBTC, nor can they sell the bitcoins in GBTC.

Not all users can backread those 34 pages just to read the previous discussion. I take my chance to ask questions since this is a QA thread and it will be more efficient to do so. This is why I put this postscript "I didn’t know if this question is already asked here. Just refer me to the answer if there is." before I start my post. I read the OP and it gives me a lot of info about Grayscale so I ask a question that is not listed in there. Sorry if I trouble you with repetitive questions. Maybe put some previous Q&A on the OP so that new readers can easily grasp the info about the common questions?

The Grayscale Bitcoin Trust is a trust. It is a separate entity that it managed by Grayscale, and it pays Grayscale a management fee of 2% per year. The bitcoins in the trust were deposited in exchange for shares in the trust. Grayscale does not own the bitcoins in the trust. The trust owns the bitcoins. Grayscale does not own the trust. The shareholders own the trust.

The bitcoins in the trust were deposited in exchange for shares in the trust. While Grayscale deposited the initial bitcoins, they certainly did not deposit all of the bitcoins. However, Grayscale did have convenience option in which they would purchase the bitcoins to be deposited for the customer.

The structure of the trust currently does not allow the bitcoins to be sold, lent, or used as collateral. Grayscale cannot sell the bitcoins in the trust.

Do all the shareholders decide on what token will be purchased using the money they trust to Grayscale or Grayscale gives a proposal on for shareholders to vote if they will buy or not? I'm working in the insurance sector so I want to know the flow of how Grayscale acquired

[franky1]

share holders do not own the trust
NO ONE DOES
thats the point of trusts

they have trustees(managers/sponsors) that control value going in and out

the shares are 'advisory' shares of the sponsor. not stock options(ownership certificates) of the trust collateral

share holders can vote on the contract terms. and change them
but they are not owners nor "owed" btc

its not going to be a redemption because the SEC has continually said "no". and its this that grayscale are fighting
all grayscale can do is sell shares for fiat at the share rate and void said shares

this can unpair/untether some btc inside the trust. but that is not then to be distributed to ex shareholders. its to go back to the "sponsers" (grayscale/DCG)
or more likely just re-jig the pairing where it moves the 'btc per share' from 0.00091 to 0.0014
the whole SEC /ETF debacle is that by saying no. the SEC is not letting people have ownership of btc.
meaning no "redemption"

all that can be offered is a tender(fiat) buyback of shares to cut down how many advisory shares are available

[franky1]

looking more into the "valkerie" stuff i started looking into a fortnight ago (i know im slow on this one)

so valkerie mainly funded/owned by Justin sun

justin sun made a tender offer of his own personal wealth of $1b to finance DCG/grayscale to do the share dissolution(buyback) which means justin sun would end up with the $2b of btc that get unlocked.
(though grayscale/dcg may also just self/elsewhere fund that option and not use justin sun)

and separately justin sun(via his majority ownership of valkerie) made another offer to grayscale to want to invest under $6b(share value not asset value) to become the sponsors of the trust and just take grayscale out of the equation of the GBTC trust

so it turns out although brand valkerie was just a IT technology company a few years ago. justin sun is the head guy backing valkerie to become a hedge fund

i did see all the pieces a fortnight ago, but didnt put the effort to stitch it al together until now

lets see which deals playout after DCG(grayscale) get another answer from the appeals judges "shortly after feb 3rd"

[fillippone]

lets see which deals playout after DCG(grayscale) get another answer from the appeals judges "shortly after feb 3rd"

Fascinating analysis. But I wouldn’t hold my breath for the SEC decision. I really cannot see them changing their stance, so far. I do hope being wrong, of course.

[franky1]

lets see which deals playout after DCG(grayscale) get another answer from the appeals judges "shortly after feb 3rd"

Fascinating analysis. But I wouldn’t hold my breath for the SEC decision. I really cannot see them changing their stance, so far. I do hope being wrong, of course.

well its not "sec" its a court of appeals. so its kind of he last leg of arm twisting and final verdict on decisions.
atleast by that date soon after feb 3rd its a more tangible bit of clarity about where grayscale sits in the chances of a EFT being accepted

if not then grayscale and all other "trusts" need to go back to the drawing board of how they set up their trust contracts and organisation. becasue obvious current generation of template they are proposing doesnt fit the SEC demands

however if it is allowed then all other companies can start making their "trusts" using the same template becasue they then have a precedent to follow

[Daltonik]

As Bloomberg has learned, nevertheless, the Genesis cryptocurrency lender, as well as its subsidiaries Genesis Global Capital LLC and Genesis Asia Pacific Pte, could not resist and they filed for Chapter 11 bankruptcy in the Southern District of New York.
We can talk about the amount of up to $10 billion for both assets and liabilities, and for more than 100,000 creditors, this 50 unsecured claims amount to about $3.4 billion.

Source: https://www.bloomberg.com/news/articles/2023-01-20/crypto-lender-genesis-files-for-bankruptcy-as-crisis-spreads

[franky1]

when it comes to genesis bankruptcy. i am not interested in who genesis owes. as those are now creditors. locked into waiting for the courts to shuffle funds about and pay out. thus slow news taking months to effectuate

what is more interesting is who genesis has given loans to and invested in. because if there are any companies that took value from genesis could see the administrators claw back that value before the prescribed term dates. meaning then affecting other companies suddenly needing to find funds to give back to genesis

[Nolik_19]

I learned a lot of useful things, thank you

[bbc.reporter]

when it comes to genesis bankruptcy. i am not interested in who genesis owes. as those are now creditors. locked into waiting for the courts to shuffle funds about and pay out. thus slow news taking months to effectuate

what is more interesting is who genesis has given loans to and invested in. because if there are any companies that took value from genesis could see the administrators claw back that value before the prescribed term dates. meaning then affecting other companies suddenly needing to find funds to give back to genesis

Gemini to earn yield for depositors from their Earn product, sent the coins to Genesis Global as the source of yield. However, it appears that Genesis Global sent those coins to Digital Currency Group in exchange for a promissory note.

This is very head scratching because what would Barry Silbert do when Genesis Global has filed for bankruptcy already? Will he sell GBTC to honor the promissory note? What would happen to the coins behind GBTC?

[Daltonik]

when it comes to genesis bankruptcy. i am not interested in who genesis owes. as those are now creditors. locked into waiting for the courts to shuffle funds about and pay out. thus slow news taking months to effectuate

what is more interesting is who genesis has given loans to and invested in. because if there are any companies that took value from genesis could see the administrators claw back that value before the prescribed term dates. meaning then affecting other companies suddenly needing to find funds to give back to genesis

There is no exact data on where Genesis Global invested, but one thing is for sure that they confirmed themselves is the loss of hundreds of millions of dollars due to loans provided to the bankrupt crypto-hedge fund Three Arrows Capital, even in the report for Q3 2022 Genesis Trading there is no breakdown by individual positions, just general figures such as "The Genesis Credit Department has provided loans in the amount of about $8.4 billion"

https://info.genesistrading.com/hubfs/quarterly-reports/2022/Genesis22Q3QuarterlyReport.pdf

Upd: What is interesting is that DCG owes its Genesis subsidiary $1.65 billion. includes loans in the amount of $575 million, due in May 2022, and a promissory note in the amount of $1.1 billion, due in June 2032

https://www.coindesk.com/business/2023/01/20/digital-currency-group-owes-subsidiary-genesis-global-over-165b/

[bbc.reporter]

Upd: What is interesting is that DCG owes its Genesis subsidiary $1.65 billion. includes loans in the amount of $575 million, due in May 2022, and a promissory note in the amount of $1.1 billion, due in June 2032

https://www.coindesk.com/business/2023/01/20/digital-currency-group-owes-subsidiary-genesis-global-over-165b/

The comedy show in the cryptospace continues hehehe. On June 25, 2021, this was Barry Silbert's tweet. Was he implying that his companies were not part of the daisy chain of borrowers and lenders or was he implying that he was part of it but he is not a part of the weak link? It appears he is very much mistaken if he was implying that he was not part of the weak link and he was lying if he was implying that he was not part of the daisy chain.



There is a daisy chain of borrowers and lenders in the crypto space -- most well capitalized, but some are not

Lots of leverage still in the ecosystem...including in some non-obvious places

Important to understand counterparty risk and where are the weak links in the chain

Source https://mobile.twitter.com/barrysilbert/status/1408191462324441092



In any case, the cryptospace comedy show might end with Justin Sun as the king of the cryptospace hehehehehe.

[franky1]

thats barrys game though

setting up businesses, trusts and shell companies is a way a human can say "i didnt do it" by saying "it was company X"


notice when times are good he calls out how the companies are part of the group and he has offered them advice and instructions on business strategy and proposals..
when things are bad he highlights how they have their own management teams and make their own decisions and how he even as a board member was not involved in said decisions

even in his latest announcements you can see him do it
says he is not involved in genesis bankruptcy negotiations with creditors.. but then says how DCG is

he cant help himself to pretend he had no involvement but at same time be involved

https://dcgupdate.com/ - jan 20th letter
FLIP

Yesterday, the Genesis lending entities filed for chapter 11 bankruptcy protection in the Southern District of New York.
Genesis has its own independent management team, legal counsel, and financial advisors, and appointed a special committee of independent directors, who are in charge of the Genesis Capital restructuring, and who recommended and decided that Genesis Capital file chapter 11.  Neither DCG nor any of its employees, including those who sit on the Genesis board of directors, were involved in the decision to file for bankruptcy.

FLOP

DCG continues to engage with Genesis Capital and its creditors to reach an amicable solution for all parties.

FLIP

its subsidiaries have operated as independent companies with their own management teams, financial and risk management protocols, and legal and compliance oversight.  Each subsidiary has its own culture, operational structure, and incentive mechanisms.  Every aspect of each subsidiary’s day-to-day business is directed by the respective subsidiary’s leadership team.

FLOP

How has DCG engaged with Genesis Capital’s creditors?
DCG has actively engaged with Genesis Capital’s creditors to reach agreement on a solution for all parties.  Multiple proposals have been exchanged between the parties.

oh and by the way
https://dcgupdate.com/ - jan 10th letter

DCG currently owes Genesis Capital (i) $447.5M* in USD and (ii) 4,550 BTC (~$78M), which matures in May 2023.
DCG borrowed $500M in USD between January and May 2022 at interest rates of 10%-12%.

8. How did DCG use the proceeds of the USD loans borrowed from Genesis Capital?
The amounts borrowed by DCG were initially held as cash in Treasury to be used as opportunities arose. The key opportunities ultimately identified were the repurchase of DCG stock from one of our earliest venture investors and investments in liquid tokens and public equities.

the underline sounds like "grayscale" to me.. funny how he doesnt want to direct name drop where most of DCG loan funnelled funds went to

[bbc.reporter]

oh and by the way
https://dcgupdate.com/ - jan 10th letter

DCG currently owes Genesis Capital (i) $447.5M* in USD and (ii) 4,550 BTC (~$78M), which matures in May 2023.
DCG borrowed $500M in USD between January and May 2022 at interest rates of 10%-12%.

8. How did DCG use the proceeds of the USD loans borrowed from Genesis Capital?
The amounts borrowed by DCG were initially held as cash in Treasury to be used as opportunities arose. The key opportunities ultimately identified were the repurchase of DCG stock from one of our earliest venture investors and investments in liquid tokens and public equities.

the underline sounds like "grayscale" to me.. funny how he doesnt want to direct name drop where most of DCG loan funnelled funds went to

It appears the loan that the Digital Currency Group has received from Genesis Global is being used to give the early investors the liquidity they need to cashout from their original investment in DCG. Where did the $900 million that was sent to Genesis Global come from? From Gemini. Where did Gemini get the $900 million they sent to Genesis Global? From Gemini Earn depositors.

I am not calling DCG a ponzi scheme, however, it appears that it is becoming one or has become one already.

[franky1]

anything where a company of any kind is too eager to say "yes we accept your money" but then does not allow redemptions/refunds and say "go find another fool to take the shares off your hands.." is scammy, well not really a good service to trust atleast

heck even the ETH merge became awful by letting people easily stake. but then not having code to unstake where users have to find other market methods to swap between themselves while stuck in stake
(oh await the price bubble correction when unstaking code is activated, ETH price is too inflated bubble for its new 99% lower base bottom value due to becoming PoS instead of PoW costing)
....
if say years ago any CEX allowed fiat deposits to buy BTC. but didnt allow trading-out to get fiat back out from same CEX. ..those CEX would look more scammy
..
when madoff done his ponzi where he didnt allow redemptions. he could have easily avoided alot of prison by just telling his customers to trade share ownerships amongst themselves if they wanted to exit whilst still allowing madoff to refuse to offer redemptions direct

[NotATether]

It will be interesting to hear from our resident Greyscale expert @filippone  whether he thinks the Genesis bankruptcy is going to take them down as well, or at least their fund. Considering that there is (yet another) $10 billion of money due to investors.

[Daltonik]

Now a little bit about what concerns Grayscale. So Grayscale CEO Michael Sonnenshein gave a short interview to CNBC after his speech in Congress, where he says that he is optimistic about the upcoming March 7 court hearings in the Grayscale v. SEC case, a decision on which is expected in Q2 or Q3 this year. A rather stingy interview about the meeting of Michael Sonnenshein with congressmen of both chambers regarding the protection of investors' interests related to the SEC's refusal to convert the Grayscale bitcoin trust into an ETF, but let's hope that after the meeting the CEO has grounds for optimism.

https://www.youtube.com/watch?v=RQfxappCEFo

[fillippone]

Now a little bit about what concerns Grayscale. So Grayscale CEO Michael Sonnenshein gave a short interview to CNBC after his speech in Congress, where he says that he is optimistic about the upcoming March 7 court hearings in the Grayscale v. SEC case, a decision on which is expected in Q2 or Q3 this year. A rather stingy interview about the meeting of Michael Sonnenshein with congressmen of both chambers regarding the protection of investors' interests related to the SEC's refusal to convert the Grayscale bitcoin trust into an ETF, but let's hope that after the meeting the CEO has grounds for optimism.

https://www.youtube.com/watch?v=RQfxappCEFo

I do agree with his points: the SEC is delaying a long overdue decision and acting against the interest of potential subscribers. The final decision, be it either approval or explicit denial (as an hyperbole), should have been made months ago.

[bbc.reporter]

anything where a company of any kind is too eager to say "yes we accept your money" but then does not allow redemptions/refunds and say "go find another fool to take the shares off your hands.." is scammy, well not really a good service to trust atleast

That is a description of a ponzi scheme and it appears that this bear market is where it will prove if GBTC is one or not.

I reckon the cryptospace might be waiting for 2 more VIP terminations or bankruptcy before the end of the bear market. The list of VIPs is Changpeng Zhao of Binance, Barry Silbert of Grayscale and Michael Saylor of Microstrategy. There will be only one winner and it appears that it might be Michael Saylor hehehe. I have mentioned this already, Binance might be more in danger of insolvency than speculated.

[franky1]

we have had a decade of whales trying to poke their finger in and dig into the majority of businesses/services of bitcoin. (DCG, silvergate and a few other names)

i think the next generation of institutions/whales are starting to dig their fingers into the previous
the next ones go by the name of blackrock Ark and a few other names

then from 2025 we will see the central banks being able to hoard and grab bitcoin as business reserve(though current drafts only allow 2-5% of there collateral/reserves to be bitcoin)