In a pivotal move to navigate its ongoing bankruptcy proceedings, cryptocurrency lending firm Genesis Global Capital has formally requested permission from the U.S. Bankruptcy Court in the Southern District of New York to sell approximately $1.6 billion worth of trust assets. The assets in question primarily consist of shares in various Grayscale trusts, including the Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust, and Grayscale Ethereum Classic Trust.
Renowned crypto journalist Colin Wu, through Wu Blockchain, brought attention to the detailed filing submitted by Genesis, a subsidiary of the Digital Currency Group. The filing unveils the composition of the assets slated for sale, with approximately $1.4 billion tied up in Grayscale Bitcoin Trust shares, an additional $165 million in Grayscale Ethereum Trust, and roughly $38 million in Grayscale Ethereum Classic Trust. Genesis has also sought to expedite the process, urging the court to address the sale motion at its next session scheduled for February 8.
This strategic move aims to optimize the value return for the company’s creditors and stakeholders amid the complex landscape of bankruptcy. Genesis’s decision to liquidate these assets follows its prior involvement in the cryptocurrency lending space, including collateral transferred to Gemini as part of the Gemini Earn program and assets acquired through the bankruptcy of Three Arrows Capital. Notably, the sale also encompasses efforts to legally reclaim 31,180,804 additional shares, valued at approximately $1.2 billion, previously pledged to Gemini but not transferred, pending a court decision on their ownership.
Genesis Sparks Industry Response
Responses to this initiative have come from various parties, including Gemini, which has labeled the filing as a significant step forward. This development gains additional significance following the recent approval of the Grayscale Bitcoin Trust as an exchange-traded product (ETP) on January 10, potentially impacting the valuation and liquidity of the assets up for sale.
Amid these strategic maneuvers, Genesis recently agreed to settle a lawsuit with the Securities and Exchange Commission (SEC) involving the payment of a $21 million fine, contingent upon the funds available post-bankruptcy. The lawsuit pertained to the operation of the Gemini Earn program, underscoring the regulatory hurdles faced by Genesis amidst its financial restructuring efforts.
The proposed asset sale emerges as a critical component of Genesis’s broader strategy to address financial challenges and meet obligations to creditors. By liquidating holdings in the Grayscale trusts, Genesis aims to capitalize on current market conditions and regulatory developments, optimizing the recovery for its stakeholders in this dynamic chapter of the cryptocurrency landscape.