Retail investors pumped money into centralized exchanges and funds like BlockFi and Genesis…
… which then took the customer deposits and directly or indirectly entered into long GBTC positions…
..unsatisfied with the 6 month lock-up period on GBTC positions…
..the same exchanges and hedge funds borrowed against the GBTC…
…by converting their positions into cash/US-denominated stable coins…
..to provide yield to their depositors…
..and repeat the loop with new depositor funds and new leveraged long BTC positions with the USDC collateral.
Genesis provides capital to hedge funds which are used to buy BTC via Grayscale’s trust. Once the hedge funds receive GBTC, Genesis incentivizes the same hedge funds with liquidity against their GBTC (via USDC) to buy more bitcoin and deposit more, leveraged, assets into the Grayscale Trust!
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Retail investors pumped money into centralized exchanges and funds like BlockFi and Genesis…
… which then took the customer deposits and directly or indirectly entered into long GBTC positions…
..unsatisfied with the 6 month lock-up period on GBTC positions…
..the same exchanges and hedge funds borrowed against the GBTC…
…by converting their positions into cash/US-denominated stable coins…
..to provide yield to their depositors…
..and repeat the loop with new depositor funds and new leveraged long BTC positions with the USDC collateral.
Genesis provides capital to hedge funds which are used to buy BTC via Grayscale’s trust. Once the hedge funds receive GBTC, Genesis incentivizes the same hedge funds with liquidity against their GBTC (via USDC) to buy more bitcoin and deposit more, leveraged, assets into the Grayscale Trust!
How is this not criminal?