Genesis Global Capital Moves to Liquidate $1.6 Billion in Grayscale Trusts Amid Bankruptcy
Rebeca Moen Feb 05, 2024 07:58
Genesis Global Capital has petitioned the U.S. Bankruptcy Court to sell off its Grayscale Bitcoin, Ethereum, and Ethereum Classic Trust holdings, totaling approximately $1.6 billion. This strategic liquidation aims to maximize creditor repayments amidst potential market volatility, following a recent SEC settlement.
Genesis Global Capital, the crypto lending firm currently under bankruptcy proceedings, has made a significant move by requesting permission from the U.S. Bankruptcy Court in the Southern District of New York to liquidate its holdings in Grayscale's Bitcoin Trust (GBTC), Ethereum Trust (ETHE), and Ethereum Classic Trust (ETCG), with the assets collectively valued at approximately $1.6 billion. This request is part of Genesis' broader strategy to maximize the funds available for distribution to creditors amidst the potential fluctuations in the prices of the underlying assets.
The assets targeted for liquidation include around $1.4 billion in GBTC shares, $165 million in ETHE shares, and $38 million in ETCG shares. Genesis has underscored the urgency of gaining approval for the asset sale to mitigate the risks associated with price volatility in the cryptocurrency market and to facilitate timely distributions to creditors.
In addition to seeking the sale of these trust assets, Genesis is also aiming to reclaim legal ownership of 31,180,804 additional shares, valued at about $1.2 billion, that were pledged to Gemini but never transferred. This matter is currently pending resolution in court. These shares were initially pledged as collateral by Genesis to Gemini for the Gemini Earn program.
Genesis' request for liquidation comes after the firm reached an agreement with the U.S. Securities and Exchange Commission (SEC) to settle a lawsuit concerning the operation of the Gemini Earn program. As part of the settlement, Genesis agreed to pay a $21 million fine from any remaining funds after the bankruptcy process is concluded. This settlement aims to resolve the SEC's claims and allows Genesis to focus on maximizing returns for its creditors without the burden of protracted litigation.
The motion for asset liquidation is scheduled to be heard at an upcoming hearing on February 8, highlighting Genesis' intent to expedite the process amid ongoing challenges. This strategic liquidation effort, particularly in light of the recent conversion of GBTC to a spot Bitcoin ETF, which permits the redemption of shares in cash, marks a pivotal step in Genesis' bankruptcy proceedings and its efforts to resolve its financial obligations.
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