Grayscale ETH Trust Plunges to Almost 60% Discount

The United States Securities and Exchange Commission (SEC) has now constantly remained in disagreement with Grayscale ever since it rejected its application to convert the Grayscale Bitcoin Trust (GBTC) to a full-fledged Exchange Traded Fund (ETF) product.

Not certain if the current situation of the firm is a result of this controversy, Grayscale Ethereum Trust (ETHE) is currently traded at almost a 60% discount in comparison to the actual price of Ethereum (ETH).

In addition to this, the company’s shares are still falling and have reached a 93% plunge from their all-time high value in June 2019.

This discounted price had been a trend for a while now, although the ETHE was at one-time trading significantly close to the value of ETH. There are speculations that the debt owed by its parent company Digital Currency Group (DCG) to Genesis may have been a contributor to this decline.

Grayscale Parent Company DCG Owes Genesis

From the records, DCG has a liability of $575 million to Genesis with a repayment window of May this year and a $1.1 million promissory note due for repayment in June. Altogether, this brings DCG’s debt to Genesis to $1.675 million. Notably, the Chief Executive Officer (CEO) of DCG Barry Silbert explained that these loans were issued in the course of regular business with Genesis.

Gilbert said that in the “ordinary course of business, DCG has borrowed money from Genesis Global Capital in the same vein as hundreds of crypto investment firms. These loans were always structured on an arm’s length basis and priced at prevailing market interest rates.”

The Grayscale Ethereum Trust is not the only fund trading below its underlying price, according to a picture shared by a crypto Twitter influencer known as “db”, some other Grayscale products like Grayscale Bitcoin Trust, Grayscale Decentraland Trust, and Grayscale Litecoin Trust amongst others.

From the list, only Grayscale Chainlink Trust and Grayscale Filecoin Trust are doing well trading at a premium. The Grayscale Ethereum Classic Trust is the most affected fund with a 77% discount.

As it concerns its issue with the U.S. regulator, Grayscale has now filed its first brief in its case with the SEC calling it “the next milestone in our ongoing litigation following the filing of our opening brief on October 11 and the supporting amicus briefs shortly after.”