Galaxy Digital Holdings CEO Mike Novogratz has allayed fears about the crisis facing Digital Currency Group (DCG) and Genesis, saying that while it's "not good news," it won't "include a lot of selling."
In a January 10 interview on CNBC's Squawk Box, Novogratz saying he expects the current debacle facing DCG and its related companies to "play out" over the next quarter.
"The prospect of #crypto It's not horrible but it's not great. We have regulatory headwinds that we didn't have before. People are going to cut costs and survive this transition period," says @novogratz. "Cryptocurrencies are not going away. It's a pretty clean market right now." pic.twitter.com/k57ITlRFOV
— Squawk Box (@SquawkCNBC) January 10, 2023
“There are still some overhangs, DCG and Genesis and Gemini, that will be developed in the next quarter. That's not going to be great," Novogratz said, adding:
"I don't think it includes a lot of sales, it's just not good news."
DCG is a major cryptocurrency conglomerate known as the owner and operator of Grayscale Investments, the world's largest digital asset manager.
It also owns institutional lending firm Genesis, advisory firm Foundry, cryptocurrency exchange Luno, and cryptocurrency media company CoinDesk.
Novogratz's view is in stark contrast to a Jan. 4 report from Arcane Research caveat investors pay attention to the “ongoing financial distress” at DCG, as the outcome “could severely impact crypto markets.”
He argued that if DCG were to file for bankruptcy, the firm could be forced to liquidate assets and sell significant positions in its Grayscale Bitcoin Trust (GBTC) and other cryptocurrency-related trusts, putting pressure on cryptocurrency prices.
Investors should pay attention to the ongoing financial difficulties related to Digital Currency Group (DCG), as the outcome could severely affect crypto markets.
Read more:https://t.co/5syXBpEw7q
— Arcane Research (@ArcaneResearch) January 4, 2023
However, Novogratz argued that both Bitcoin (BTC) and ether (ETH) have remained "pretty stable" despite "a lot of bad news" in recent months and have even seen a rebound in recent days.
“It's a pretty clean market right now,” Novogratz said, referring to investors who have sold or reduced leverage in recent months.
Alarm bells began ringing for DCG and Genesis late last year, after Genesis halted withdrawals on November 16 citing "unprecedented market turmoil" caused by the collapse of FTX and Three Arrows Capital.
In an open letter to DCG CEO Barry Silbert on January 2, Gemini co-founder Cameron Winklevoss alleged that DCG-owned Genesis had not yet paid a $900 million loan he owes to Gemini, which was because DCG owed Genesis $1.675 billion.
On January 10, Winklevoss wrote a second letter, this time addressed to DCG's board of directors, alleging that Silbert and DCG were only "seeking" to fill a $1.2 billion hole in Genesis' balance sheet. He said Silbert was "unfit" to run the company and called for his dismissal, effective immediately.
Earn update: an open letter to the Board of @DCGco pic.twitter.com/eakuFjDZR2
—Cameron Winklevoss (@cameron) January 10, 2023
The firing of Coinbase was "the right thing to do"
The Galaxy CEO also commented on Coinbase CEO Brian Armstrong's recent decision to cut another 20% of your staff in an attempt to further reduce operating costs.
Last year "was a big flop for growth stocks and for cryptocurrencies, so everything about that [...] that had big costs and reduced revenue, it got hit,” Novogratz said.
“I think CEOs [including] Brian at Coinbase, and any rational CEO, is doing the right thing."
Novogratz said the outlook for cryptocurrencies isn't horrible, but it's not "great" either.
“We have regulatory headwinds that we didn't have before. We have time to heal and rebuild the narrative, so people will cut costs and survive this transition period,” she said, adding:
"2023 is a year in which you want to survive and recover."
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