The upheaval in the world of crypto is showing no signs of petering out in the new year. Cameron Winklevoss, the co-founder of crypto exchange Gemini Trust, accused Barry Silbert’s Digital Currency Group of bad-faith tactics in a dispute over $900 million of frozen funds. The New York firm Messari has released its annual outlook for the crypto industry, but we’ll focus for now on what Ryan Selkis’s team is saying about this particular dispute, which it says is the most important trend in early 2023 to keep an eye on.
DCG, says the Messari team, is one of the most systemically important companies in the crypto ecosystem. There’s more than $2 billion stuck at Genesis, whose primary borrower is DCG. According to Messari, “the options look pretty bleak.” Creditors could strike an out-of-court settlement and agree to a haircut on deposits in return for debt or equity. Genesis alternatively could file for bankruptcy, dragging their parent or external creditors through a lengthy process. Or DCG could recapitalize. But there’s some big open questions. One is whether DCG or Genesis own $700 million worth of Grayscale Bitcoin Trust
and the Grayscale Ethereum Trust
If it’s DCG, that’s a big asset to borrow against, but if it’s already spoken for at Genesis, “we might yet see a further rippling out of contagion.” Another b …