Galaxy Digital Holdings CEO Mike Novogratz has played down fears of a crisis facing Digital Currency Group (DCG) and Genesis, saying it’s “not good,” it won’t “involve a lot of selling.”
In a January 10 interview on CNBC’s Squawk Box, Novogratz said he expects the current debacle facing DCG and related companies to “play out” over the next quarter.
“Prospects for #crypto not terrible but not good. We have unprecedented regulatory headwinds. People will cut costs and survive this transitional period,” he said @novogratz. “Crypto is not going away. Right now the market is pretty clean.” pic.twitter.com/k57ITlRFOV
– Squawk Box (@SquawkCNBC) January 10, 2023
“There is still some overhang – DCG and Genesis and Gemini – that will play out in the next quarter. It will not be good,” said Novogratz, adding:
“I don’t think it will involve a lot of selling, not good news.”
DCG is a major crypto conglomerate known as the owner and operator of Grayscale Investments, the world’s largest digital asset manager.
It also owns institutional lending company Genesis, advisory company Foundry, crypto exchange Luno and crypto media company CoinDesk.
Novogratz’s opinion is in stark contrast to a January 4 report from Arcane Research warning investors to pay attention to DCG’s “continuing financial woes” because the results “could impact the crypto market”.
He argued that if DCG were to go bankrupt, the company could be forced to liquidate its assets and sell its sizable positions in Grayscale Bitcoin Trust (GBTC) and other crypto-related trusts, which would put pressure on crypto prices.
Investors should pay attention to the financial situation related to the Digital Currency Group (DCG) because its results can affect the crypto market.
Read more: https://t.co/5syXBpEw7q
– Arcane Research (@ArcaneResearch) January 4, 2023
However, Novogratz argued that Bitcoin (BTC) and Ether (ETH) have been “pretty stable” despite “a lot of bad news” over the past few months and have even seen a rise in the past few days.
“It’s a pretty clean market right now,” said Novogratz, referring to investors who have sold or reduced their influence in recent months.
The first alarm bells started ringing for DCG and Genesis late last year, after Genesis ended its withdrawal on November 16 citing “unprecedented market turmoil” caused by the collapse of FTX and Three Arrows Capital.
In an open letter addressed to DCG CEO Barry Silbert on January 2, Gemini founder Cameron Winklevoss said that DCG-owned Genesis has not paid a $900 million loan to Gemini, which DCG owes $1.675 billion. .
On January 10, Winklevoss wrote a second letter, this time to DCG’s board of directors, claiming Silbert and DCG were only “pretending” to fill a $1.2 billion hole in Genesis’ balance sheet. He said Silbert was “unfit” to run the company and asked to be removed, effective immediately.
Get an Update: Open Letter to Council @DCGco pic.twitter.com/eakuFjDZR2
— Cameron Winklevoss (@cameron) January 10, 2023
Coinbase layoffs are ‘the right thing to do’
The Galaxy CEO also commented on Coinbase CEO Brian Armstrong’s recent decision to cut another 20% of his workforce to reduce operating costs.
Last year “was a big washout for growth stocks and crypto, and anything related to it […] that has large costs and shrinking revenue – got hammered,” said Novogratz.
“I think the CEO [including] Brian at Coinbase, and any rational CEO, is doing the right thing.
Novogratz said the outlook for crypto isn’t dire, but it’s also “not good.”
“We have unprecedented regulatory headwinds. We have time to heal and rebuild the narrative and therefore people will reduce costs and survive this transition period,” he said, adding:
“2023 is the year you want to live and catch the uptick.”