The DCG and Genesis debacle continue to wax strong and Grayscale Bitcoin Trust has taken some of the heat from this. The majority of the concerns have been raised around the ability of Digital Currency Group to be able to repay its debt to Genesis, which owes creditors a significant amount of money. Now, co-founder of bankrupt crypto hedge fund 3AC Su Zhu has joined the conversation and his predictions could adversely impact Grayscale.

As reported by Bitcoinist on Tuesday, 3AC co-founder and CEO Su Zhu published a Twitter thread detailing his take on the DCG drama. He explains that FTX and DCG, the parent company of Genesis, had conspired to attack LUNA, whose decline would eventually lead to the crash of his own hedge fund.

He accused the company of doing the “hard questions” and that they allegedly continued to take deposits from investors for another six months even though they knew they were insolvent. But the most notable of the Twitter thread was that he expects the crypto lender Genesis to file for bankruptcy.

Su Zhu says that creditors would push the company to bankruptcy to take over the remaining DCG bankruptcy, which is a possibility. However, the implication of this would transcend just Genesis as DCG is the parent company of Grayscale, which runs the largest bitcoin trust in the world.

Over the last few weeks, there has been concern over the health of the Grayscale Bitcoin Trust (GBTC) since the news of the Genesis insolvency became public. So far, the fund has been able to hold up and Coinbase confirmed that it holds over 600,000 BTC in its custody service. But the question remains, what happens if Genesis were to file for bankruptcy?

Genesis reportedly owes Gemini over $900 million which belongs to the users of Gemini Earn, a yield-earning program on the exchange. Now, Gemini users are already clamoring for their funds and a lawsuit has been filed against the Winklevoss brothers already. So for Gemini to be able to get back its user funds which were given to Genesis, it may have to force the crypto lender into bankruptcy.

If Genesis files for bankruptcy, it would have to liquidate DCG assets, which reportedly owes the crypto lender over $1.6 billion, although CEO of DCG Barry Silbert has denied this. Nevertheless, the liquidation of DCG assets would affect the GBTC because it would also have to liquidate its position in the bitcoin trust. Given that DCG is a large investor in the fund, it could deepen the already wide discount to NAV that the trust is currently trading at. 

However, all of this remains speculation at this point. It remains a waiting game to see how all of this unfolds but it shows that the crypto market has another interesting year ahead of it. 

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