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The bankrupt cryptocurrency lending company Genesis has transformed roughly 36 million shares of Grayscale Bitcoin Trust (GBTC) into Bitcoin as part of its strategy to address its obligations to creditors.
A recent report from Bloomberg indicates that the firm liquidated the GBTC shares on April 2, with a valuation of about $58.50 per share at that time.
Importantly, the price of GBTC shares has increased by nearly 50% since Genesis first requested authorization from the U.S. bankruptcy court to sell the shares.
On February 2, when the shares were valued at $38.50, Genesis initiated the process of selling the GBTC shares.
Genesis Acquires $2.1 Billion in Bitcoin
The total revenue generated from the sale reached $2.1 billion, allowing Genesis to purchase 32,041 Bitcoin on April 2, at a rate of $65,685 per Bitcoin.
These newly acquired Bitcoins will be utilized by Genesis to meet its commitments to creditors.
At the time of this report, the 32,041 Bitcoin is valued at approximately $2.18 billion.
Genesis purchases $2.1B of Bitcoin following GBTC sell-off
This substantial Bitcoin acquisition follows Coinbase’s statement that most of the proceeds from the GBTC liquidation would “remain within the crypto ecosystem.”
Bankrupt crypto lending firm Genesis reportedly… pic.twitter.com/wthYyOpyIu
— Giannis Andreou (@gandreou007) April 6, 2024
In light of worries regarding the potential effects of this significant sell-off on the cryptocurrency market, the exchange Coinbase reassured the community that the funds are expected to stay within the crypto ecosystem, likely having a neutral overall impact on the market.
Coinbase clarified that the bankruptcy plan permits Genesis to either convert GBTC shares into Bitcoin assets for the creditors or to sell the shares directly and distribute the cash.
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This action follows Digital Currency Group’s assertion that its subsidiary, Genesis, has proposed to compensate its customers beyond their actual entitlements.
Genesis Reaches Settlement with the SEC
In a bankruptcy court filing last month, Genesis revealed that it had come to a settlement agreement with the SEC, agreeing to pay $21 million to resolve the civil lawsuit.
In November 2022, Gemini Earn had around 340,000 customers and $900 million in assets under management, according to the SEC’s lawsuit.
After FTX’s bankruptcy in the same month, Genesis temporarily halted withdrawals for Gemini Earn, citing “unprecedented market turmoil” and liquidity challenges.
Genesis filed for bankruptcy following the SEC’s lawsuit, which was initiated in January of the previous year.
In February, Gemini consented to return $1.1 billion to Gemini Earn customers through the Genesis bankruptcy process, as part of a settlement with New York’s financial regulator.
Recently, a federal judge ruled that the SEC’s lawsuit against the cryptocurrency firms Gemini and Genesis will advance in court.
This ruling came after Gemini and Genesis sought to have the lawsuit, which claims the sale of unregistered securities through the Gemini Earn program, dismissed.
In a 32-page order, New York District Court Judge Edgardo Ramos denied the motions to dismiss filed by Gemini and Genesis, stating that the SEC’s allegations were sufficiently plausible to warrant the continuation of legal proceedings.
Furthermore, the judge rejected a separate request from the companies to suspend the SEC’s demand for them to stop selling securities and to relinquish Gemini Earn profits if the SEC prevails in the lawsuit.
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