Genesis Global, a prominent cryptocurrency company, has received approval from the bankruptcy court to sell approximately 35 million shares of Grayscale Bitcoin Trust (GBTC), with an estimated value of $1.3 billion. This decision, made by U.S. Bankruptcy Judge Sean Lane in a court hearing held in White Plains, New York, grants Genesis the authority to monetize its holdings in various Grayscale Trusts.
In addition to the 35 million GBTC shares, Genesis intends to sell over 11 million shares in two Grayscale Ethereum Trusts, which have a combined value exceeding $200 million. This strategic move will result in a total of around $1.6 billion in shares across Grayscale Bitcoin Trust, Grayscale Ethereum Trust, and Grayscale Ethereum Classic Trust. The approval allows Genesis to proceed with this plan.
Genesis Global’s parent company, Digital Currency Group (DCG), attempted to delay the proposed sale until after the bankruptcy court decides on the subsidiary’s debt repayment plan, which is scheduled for later this month. DCG expressed concerns that premature Grayscale share sales could depress prices, leading to reduced recoveries for Genesis creditors. Jeffrey Saferstein, representing DCG, also emphasized the need for careful consideration to prevent the rapid unloading of shares. Furthermore, DCG sought the right to provide input on the sale of Grayscale shares.
Despite DCG’s objections, Judge Sean Lane ruled in favor of Genesis Global, acknowledging the company’s right to determine the strategic sale of its assets. To address potential market impacts, Lane emphasized that the sales would be executed gradually and with the assistance of a broker. This cautious approach aims to prevent any adverse effects on prices. The judge justified his decision by highlighting the considerable expertise of Genesis and its creditors in the cryptocurrency industry, suggesting their ability to maximize the value of the Grayscale shares.
While the sale proceeds, Genesis is also progressing with its liquidation plan, which involves winding down the company and repaying customers either in cash or cryptocurrency, depending on their deposits. Earlier this month, the company reached settlements with the U.S. Securities and Exchange Commission (SEC) and the New York Attorney General Letitia James, resolving their objections to Genesis’ bankruptcy plan. As part of the settlements, the SEC will be paid a $21 million fine if there are surplus funds after customer repayments. Any recovered funds from the bankruptcy proceedings will be used by the New York Attorney General to assist creditors who may have been defrauded by Genesis.
With the bankruptcy court’s approval, Genesis Global is now authorized to sell a significant number of shares in Grayscale Trusts. This strategic move aims to maximize value for both Genesis and its creditors. Judge Sean Lane’s ruling highlights the expertise of Genesis and its creditors in the crypto space. Genesis will continue with its liquidation plan, ensuring customers are repaid and addressing regulatory concerns. The outcome of this sale and liquidation process will significantly impact Genesis Global’s future and the broader cryptocurrency industry.
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