Genesis Global has secured approval from a bankruptcy court to sell around 35 million shares of the Grayscale Bitcoin Trust (GBTC), valued at a staggering $1.3 billion.
The sale will inject considerable liquidity into Genesis at a time when it has been navigating through financial doldrums.
Genesis Receives Green Light
The news of the approval was first reported on the 14th of February, with the decision being delivered by Judge Sean Lane. The decision allows Genesis to liquidate its GBTC shares into Bitcoin or cash, with the sale set to inject significant liquidity into Genesis. Genesis also plans to offload over 11 million shares in two Grayscale Ethereum Trusts, further bolstering its position with an additional $200 million.
Genesis is a subsidiary of Digital Currency Group (DCG) and has faced considerable challenges after the collapse of several major projects and players in the crypto space. The company halted user withdrawals after the FTX collapse, highlighting the liquidity crunch that has crippled many crypto firms during one of the harshest crypto winters witnessed to date. The approval allows Genesis to navigate bankruptcy proceedings and stabilize its precarious financial position.
DCG, Grayscale Opposed To Sale
The court approval comes at a crucial time for Grayscale, as parent company DCG continues its restructuring efforts. Both DCG and Grayscale have opposed the sale, with Grayscale seeking a postponement until a decision on a proposed debt repayment plan is reached. Grayscale is concerned that proceeding with the sale could be premature if the court rejected the repayment strategy in its final decision.
Another reason for Grayscale’s opposition is the timing of the sale. The decision comes after the successful transition of Grayscale’s flagship GBTC fund into a spot Bitcoin ETF. While the ETF has had a significant trading volume since its launch, it has also experienced a considerable reduction in value, having shed almost $6 billion.
Genesis had asked the court for permission to offload the $1.3 billion worth of shares in a filing on the 2nd of February. Approval will see Genesis offload nearly $1.6 billion worth of shares across the ETF and two trusts, Grayscale’s Ethereum Trust and Grayscale’s Ethereum Classic Trust.
SEC Settlement
Genesis has also agreed to a $21 million settlement with the United States Securities and Exchange Commission over allegations related to the Gemini Earn program. Additionally, it has also settled a lawsuit related to the Earn program with New York Attorney General Letitia James. Under the settlement, Genesis has agreed to stop conducting business in New York. Genesis was also fined $8 million by the New York State Department of Financial Services for compliance failures violating DFS’ virtual currency and cybersecurity regulations.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
