- Shares of Grayscale Bitcoin Trust have discounted to unprecedented lows
- Tantra Labs, which focused on bitcoin, attracted new customers by promising $100 in bitcoin upon signup and 12% APY
Tantra Labs, a crypto trading firm with an interest-bearing investment product, is being liquidated due to “performance degradation” and lack of fresh capital, CoinDesk reported. On Thursday, its creditors received a letter from Atlanta-based bankruptcy trustee GGG Partners, saying the latter had been appointed liquidation manager.
The letter contained a message Tantra CEO Russell LaCour:
When Tantra Labs was created, the objective was to return the most competitive BTC- and ETH-denominated returns in crypto. In the period leading to today’s decision by the company’s executive board, however, the company noticed severe degradation of performance in its portfolio. This degradation, combined with other events occurring in the markets in which Tantra operates, led to the company’s balance sheet being put in a precarious position.
LaCour added that the shares of Grayscale Bitcoin Trust had “discounted to unprecedented lows.” The Grayscale Bitcoin Trust is the biggest cryptocurrency fund in the world and it trades as a stock. Its shares traded at the record discount of 28% this week due to a variety of factors.
Share price traded at a premium a year ago
At the beginning of last year, Grayscale’s shares traded at a premium. Since February, however, it has been on a steady decline. The fund wants to become an exchange-traded fund, but the SEC has been against a physical bitcoin-backed ETF so far.
Tantra promised lucrative signup promotions
Tantra Labs, which focused on bitcoin, attracted new customers by promising $100 in bitcoin upon signup and 12% APY. Later, this was reduced to 6%. They had more than $80 million assets under management as of October 2021 according to a reddit thread.
Investors can buy Grayscale shares at NAV
Accredited investors can acquire shares in the fund at the net asset value (NAV) by depositing USD or bitcoin in daily private placements. After a lock-in period of six months, they can sell the shares in the secondary market. Any bitcoin deposited remains locked forever because the trust is a closed-end fund.
Institutions would lock in USD or bitcoin in exchange for shares priced at NAV and sell them at a premium half a year later, taking the spread as profit. Grayscale became immensely popular at the end of 2020 when the share premium reached a record high of 40%. At the time, futures traded at a premium of 15%.
The premium turned into a discount last February and has been widening since. Institutions that bought shares at NAV back then are losing money fast.
