Genesis Global Capital has officially sought the green light from the U.S. Bankruptcy Court in the Southern District of New York to conduct a significant asset sale valued at approximately $1.6 billion.
This move, aimed at navigating through its current bankruptcy proceedings, involves the proposed liquidation of shares held in various Grayscale trusts, including the Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust, and Grayscale Ethereum Classic Trust.
Genesis Seeks Court Approval for Asset Sale Amid Bankruptcy
Genesis Global Capital, under the Digital Currency Group umbrella, has filed with the U.S. Bankruptcy Court in the Southern District of New York to sell assets worth around $1.6 billion.
This includes a significant portion of shares in Grayscale trusts—$1.4 billion in Grayscale Bitcoin Trust shares, $165 million in Grayscale Ethereum Trust, and $38 million in Grayscale Ethereum Classic Trust. The firm is pushing for a quick court hearing on February 8 to expedite the sale.
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This move is part of Genesis’s broader strategy to maximize returns for creditors and stakeholders as it navigates bankruptcy. The company’s history of cryptocurrency lending, including transactions with Gemini’s Earn program and acquisitions from the Three Arrows Capital bankruptcy, underscores the complexity of its financial entanglements.
Additionally, Genesis is fighting to reclaim over 31 million shares, worth about $1.2 billion, from Gemini, with the outcome contingent on an upcoming court ruling regarding their ownership.
Reactions to Genesis’s Strategic Move
Gemini, directly impacted by Genesis’s filing, views this step as a positive development, highlighting its potential to significantly influence the situation. The recent transformation of the Grayscale Bitcoin Trust into an exchange-traded product (ETP) on January 10 adds another layer of complexity, potentially enhancing the value and marketability of Genesis’s assets up for sale.
In parallel, Genesis has reached a settlement with the SEC, agreeing to a $21 million fine related to its involvement with the Gemini Earn program. This settlement, however, is contingent on the availability of funds following the bankruptcy proceedings, underscoring the financial and regulatory hurdles Genesis faces as it attempts to restructure and satisfy its obligations.
Strategic Implications of the Asset Liquidation
Genesis Global Capital’s decision to liquidate its significant holdings in Grayscale trusts is a calculated move within its comprehensive strategy to navigate financial turmoil and meet creditor demands.
This approach not only aims to capitalize on favorable market conditions but also seeks to adapt to recent regulatory shifts. By selling these assets, Genesis is looking to maximize the financial recovery for all involved stakeholders, demonstrating its proactive efforts to manage its obligations and work towards a resolution of its bankruptcy proceedings.