Kelvin Daminabo
Allegedly, Genesis, a crypto lending firm facing challenges, has purportedly acquired $2.1 billion worth of Bitcoin (BTC) subsequent to selling off around 36 million shares of the Grayscale Bitcoin Trust (GBTC).
As per a Bloomberg Law report referencing court filings on April 5, Genesis divested 36 million GBTC shares and utilized the funds to procure 32,041 Bitcoins, aiming to allocate them towards repaying creditors.
The New York bankruptcy court granted authorization to sell the GBTC shares on February 14, along with shares from Grayscale Ethereum (ETH) trusts. Genesis originally requested permission when the GBTC shares were valued at nearly $1.4 billion.
Likewise, its holdings in Grayscale Ethereum Trust were valued at $165 million, and its Grayscale Ethereum Classic Trust shares were valued at $38 million.
The valuations have undergone significant shifts due to the recent surge in Bitcoin prices. With Bitcoin now trading at around $68,000, the coins acquired with the proceeds from the GBTC shares alone are currently valued at nearly $2.2 billion.
The insolvent crypto lender intends to distribute these coins to its Gemini Earn creditors as part of its repayment approach. This move comes after objections from the Digital Currency Group (DCG), Genesis’s parent company, concerning the proposed repayment scheme, which DCG argues would result in excessive payments to lenders.
The response from the crypto community to Genesis’s actions has been varied. While Coinbase reassured that the sell-off would likely remain contained within the crypto ecosystem without significant market disruptions, concerns persist regarding its potential impact on GBTC and the broader crypto industry.
Genesis’s financial difficulties trace back to the aftermath of the FTX bankruptcy in late 2022, which disrupted its lending operations and prompted the repayment of substantial locked deposits. This situation prompted Genesis to explore various avenues, including enlisting the services of investment bank Moelis & Co. and announcing a 30% reduction in its workforce.
The FTX bankruptcy filing had ripple effects on Genesis and raised concerns about the stability of Grayscale Bitcoin Trust. Market observers were particularly apprehensive about the potential liquidation of over 600,000 Bitcoins associated with the Genesis bankruptcy.
Despite these challenges, the crypto lender recently reached a settlement with New York Attorney General Letitia James regarding allegations related to its Earn program. The settlement aims to restore assets to former Earn customers and other Genesis creditors, pending approval by a bankruptcy judge.