Genesis is no longer acting as an authorized participant for Grayscale's crypto trust products

Capital Markets • October 3, 2022, 10:31AM EDT
UPDATED: October 3, 2022, 12:02PM EDT
The Block

Quick Take

  • Grayscale has launched a new broker-dealer, Grayscale Securities, to act as an authorized participant for its crypto trust products
  • The new division replaces the role of sister-company Genesis, which was roiled by the blow-up of Three Arrows Capital. 

Digital Currency Group's Grayscale is terminating its relationship with sister firm Genesis to issue new shares of its crypto products, including the flagship fund GBTC. 

Genesis will no longer be responsible for issuing new shares of its crypto fund products as Grayscale will bring the function in-house, serving as an authorized participant for the products via a new entity, Grayscale Securities, according to a new regulatory filing with the Securities and Exchange Commission.

CoinDesk, which DCG also owns, first reported the news. 

Grayscale Securities, a registered broker-dealer with the SEC and FINRA member, will serve as the only authorized participant. Genesis will continue to serve as a liquidity provider, sourcing cryptocurrency holdings for the trusts. 

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The transition — which is effective October 3 — comes amid a flurry of exits from Genesis in the wake of the meltdown of crypto hedge fund Three Arrows Capital, against which Genesis filed a $1.3 billion claim.

Several Genesis executives have left the firm in recent months, including former CEO Michael Moro, sales and trading executive Matt Ballensweig, and head of derivatives Joshua Lim. 

The broker said in August that it cut 20% of its workforce. 


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Frank Chaparro is Host of The Scoop podcast and Director of Special Projects. He also writes a biweekly newsletter. Chaparro started his career at Business Insider, where he specialized in the intersection of digital assets and Wall Street, market structure, and financial technology. Soon after joining Business Insider out of Fordham University, Chaparro was interviewing top finance and tech executives, including billionaire Mark Cuban, “Flash Boys” star Brad Katsuyama, Cboe Global Markets CEO Ed Tilly, and New York Stock Exchange President Tom Farley. In 2018, he become a sought after reporter in the crypto world, interviewing luminaries such as Tyler Winklevoss, the cofounder of Gemini, Jeremy Allaire, the CEO of Circle, and Fundstrat head Tom Lee. For inquiries or tips, email [email protected].