Genesis Global has secured approval from a bankruptcy court to sell approximately 35 million shares of the Grayscale Bitcoin Trust (GBTC), valued at over $1.3 billion, Bloomberg News reported Feb. 14.
The decision, delivered by Judge Sean Lane, allows Genesis to liquidate its GBTC shares into Bitcoin or cash. The sale is poised to inject substantial liquidity into Genesis, which has been navigating through financial complexities.
Additionally, Genesis is set to offload over 11 million shares in two Grayscale Ethereum Trusts, further bolstering its assets with over $200 million.
Genesis, a subsidiary of the Digital Currency Group (DCG), has faced significant headwinds following the collapse of several major players in the crypto sector. The company’s decision to halt user withdrawals after the FTX debacle highlights the liquidity crunch that plagued many crypto firms amid a harsh “crypto winter.”
The court’s approval represents a crucial step for Genesis to navigate bankruptcy proceedings and stabilize its financial position.
DCG fails to delay sale
The ruling comes at a critical juncture for Genesis amidst its parent company’s broader financial strategies and restructuring efforts.
DCG and Grayscale were opposed to the sale, with the former seeking to postpone it until a final decision on a proposed debt repayment plan was reached. The concern was that proceeding with the sale could be premature if the court rejected the repayment strategy.
Nevertheless, the court’s ruling facilitates a path forward for Genesis and DCG amidst ongoing financial recalibrations.
The move follows the successful transition of Grayscale’s flagship GBTC fund into a spot bitcoin ETF. Despite the ETF’s leading trading volume since its launch last month, it has experienced a significant reduction in value, shedding more than $6 billion.
SEC, NYAG settlements
In addition to the asset liquidation, Genesis recently agreed to a $21 million settlement with the Securities and Exchange Commission (SEC) over allegations related to its Gemini Earn program.
Genesis has also settled the lawsuit filed by New York Attorney General Letitia James related to the Earn program, resolving allegations of defrauding investors through its Earn program. Genesis has agreed to cease conducting business in New York as part of the settlement.
Additionally, Genesis was recently fined $8 million by the New York State Department of Financial Services (DFS) for compliance failures that violated DFS’ virtual currency and cybersecurity regulations. These failures left the company vulnerable to illicit activity and cybersecurity threats.
