Blessing or Curse? GBTC cannot be shorted due to it not being an ETF.

Recently, there has been a lot of buzz about the impending bankruptcy of Genesis. Ryan Selkis, founder of the cryptocurrency research firm Messari, took to Twitter to address the situation, stating that DCG and Genesis cannot sell off Grayscale's fund GBTC to raise money, urging everyone not to panic excessively. Cathie Wood, founder of Ark Investment Management, also mentioned last week in an interview with Bloomberg that Grayscale is the cash cow of the DCG empire and has taken advantage of the situation to further increase their holdings in GBTC.

Regulation of Rule 144

Genesis recently caused a stir in the market by suspending its lending business, although its parent company DCG Digital Currency Group reassured shareholders in a recent letter that the group is doing well, with an expected annual revenue of up to $800 million. However, rumors persist about Genesis, even affecting the trust fund Grayscale and the media outlet Coindesk, both subsidiaries of DCG.

Founder of Messari, Ryan Selkis, explained on his Twitter that the Grayscale fund's GBTC has repeatedly failed in its attempts to become an ETF and is still subject to SEC Rule 144. Under this regulation, DCG, as a related party,

• May not sell more than 1% of the issued shares within three months or 1% of the average weekly trading volume for the previous four weeks.
• If intending to sell more than 5,000 shares or a total of over $50,000 within three months, they must first submit Form 144 to the regulatory authority, SEC, before trading.

Details of GBTC Shareholders

According to data from the Grayscale website, the total value of GBTC assets is $10.4 billion, with a total circulating shares of 692 million. Based on the latest information from Bloomberg, DCG holds approximately 66.97 million shares, roughly 10% of the total shares. In this scenario, it is unlikely for DCG to directly dump shares for fundraising. Ryan suggests that using them as collateral is a more feasible approach.

Cathie Wood Adds More GBTC Holdings and ARKK Ark Investment Funds

ARKK's Ark Investment Fund recently increased its GBTC holdings when the discount was substantial, reaching 6.49 million shares, accounting for 0.9% of the total GBTC. Founder Cathie Wood mentioned in a Bloomberg interview last week that Grayscale is the cash cow of the DCG empire and DCG will not easily give it up. The discount on GBTC continues to hover at a low point, currently quoted at a discount of 42.37%.