Creator of world’s largest bitcoin fund is arrested for manipulation, owner of BTC.inc says

The world of cryptocurrencies has another battle of the titans to watch David Baileymanager BTC Inc. and the website Bitcoin magazineaccused Grayscale CEO Barry Silbert of committing several crimes.

In a post on ‘X’(it seems that is what Twitter is now called) Bailey accused Silbert of using client money to allegedly manipulate and support the price of Grayscale Bitcoin Trust (GBTC).

GBTC is known not only as the first bitcoin fund on the market, but also as the largest in the world. The fund was founded nine years ago and holds 643,572 bitcoins, but no one seems very interested in it, as it has been selling on exchanges at a 42% discount to the bitcoin price.

“Holy shit, Barry Silbert needs to be arrested”he began, adding that Silbert “used client money to manipulate and support the price of GBTC, and used it as collateral for Bitcoin loans from Genesis users, even though it was aware of its insolvency.”

Creator of world’s largest bitcoin fund accused of using client money to manipulate GBTC price

David Bailey
David Bailey

In addition to being the head of Grayscale, the largest Bitcoin fund in the market, Barry Silbert also heads the Digital Currency Group (DCG), a massive conglomerate of companies that control Blockstream, Blockchain.com, Coindesk, and several others.

According to David Bailey’s indictment, Grayscale’s CEO reportedly spent as much as half a billion dollars by 2022, at a particularly tumultuous time in the cryptocurrency world, as Do Kwon’s Terra Luna empire collapsed.

Much of that money — about $300 million — would come from loans from Genesis, a subsidiary of Grayscale.

Bailey also alleged that Silbert bought GBTC stock to use as collateral for loans he took out to pay off BlockFi’s Bitcoin debt — another major company that also filed for bankruptcy.

It is important to note that GBTC shares traded at a discount to NAV in 2021. Bailey argues that Silbert misused loans from Genesis and BlockFi to artificially boost GBTC’s value.

New Sam Bankman-Fried

In addition to the accusations about Silbert, Bailey made an unkind comparison by associating him with the alleged criminal conduct of Sam Bankman Friedat the time CEO of the now-defunct FTX.

According to Bailey, Silbert may have used GBTC in a similar way to how Bankman-Fried would have used his FTT token to artificially inflate values ​​before his company went bankrupt.

While the investigation into the allegations has only just begun, the crypto community is on high alert, as if the market could experience another drastic drop if the information is confirmed.

So far, no representatives from Grayscale or the Digital Currency Group have made public statements about Bailey’s allegations. However, given the seriousness of the allegations, clarification is expected soon.

Source: Live Coins

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