Genesis Global Capital Moves to Liquidate $1.6 Billion in Grayscale Trusts Amid Bankruptcy

Spread the love

Genesis Global Capital has filed a petition in US bankruptcy court to sell its Grayscale Bitcoin, Ethereum and Ethereum Classic Trust assets for a total of approximately $1.6 billion. This strategic liquidation aims to maximize payouts to creditors amid potential market volatility following a recent SEC settlement.

Genesis Global Capital, the crypto lending firm currently in bankruptcy, has made a significant move by seeking permission from the US Bankruptcy Court for the Southern District of New York to liquidate its holdings in the Grayscale Bitcoin Trust (GBTC), the Ethereum Trust (ETHE) and the Ethereum Classic Trust (ETCG), the assets of which are estimated to total approximately 1, 6 billion dollars. This request is part of Genesis’ broader strategy to maximize funds available for distribution to creditors amid potential volatility in underlying asset prices.​​​​

The assets targeted for liquidation include about $1.4 billion in GBTC shares, $165 million in ETHE shares, and $38 million in ETCG shares. Genesis emphasized the urgency of obtaining 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 seeking to regain legal ownership of 31,180,804 additional shares valued at approximately $1.2 billion that have been pledged to Gemini but never transferred. This matter is currently awaiting a decision in court. These shares were originally pledged as collateral by Genesis to Gemini for the Gemini Earn program​​.

Genesis’ filing for liquidation comes after the firm reached an agreement with the US Securities and Exchange Commission (SEC) to settle a lawsuit over the operation of the Gemini Earn program. As part of the settlement, Genesis agreed to pay a $21 million fine from all remaining funds after the bankruptcy process is completed. This settlement is intended to resolve the SEC’s claims and allows Genesis to focus on maximizing returns for its creditors without the burden of protracted litigation.

ALSO READ  Former IcomTech CEO Marco Ochoa Sentenced for Wire Fraud Involving Crypto Ponzi Scheme

The asset liquidation request is scheduled to be heard at an upcoming hearing on February 8, underscoring Genesis’ intention to speed up the process amid ongoing challenges. This strategic liquidation effort, especially in light of the recent conversion of GBTC to a spot bitcoin ETF that allows for share buybacks for cash, marks a key step in Genesis’ bankruptcy proceedings and efforts to resolve its financial obligations.

Image source: Shutterstock

Leave a Comment