Bankrupt crypto lender Genesis seeks approval to sell $1.6B in trust assets
Bankrupt crypto lender Genesis has asked the United States Bankruptcy Court for the Southern District of New York for permission to liquidate assets held by Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE) and Grayscale Ethereum Classic Trust (ETCG). A total of about 1.6 billion dollars.
In a recent court filing, Genesis emphasized the urgency of obtaining approval to sell trust assets ahead of any price fluctuations in the value of its underlying assets—Bitcoin (BTC), Ethereum (ETH) and Ethereum Classic (ETC). Genesis says its aim is to maximize the amount distributed to creditors.
“Debtors believe it would be beneficial to have the power to sell and liquidate trust assets to reduce the risk of inflation in the debtor's holdings and to facilitate distribution to creditors.”
According to the filing, as of September 2023, the GBTC Trust will hold about 3.2% of all Bitcoin circulation. By December 2022, ETHE Trust will hold approximately 2.5% of all Ethereum, and ETCG Trust will hold approximately 8.5% of all Ethereum Classic.
GBTC shares account for 87% of Genesis' total shares held by the three trusts, valued at $1.38 billion.
Meanwhile, ETHE Trust contributed approximately 10% to total holdings, amounting to approximately $169 million, and ETHCG Trust contributed approximately 3%, totaling $38 million.
Genesis highlighted that following the approval of the United States Securities and Exchange Commission (SEC) on January 10, GBTC will be converted into a Bitcoin exchange-traded fund (ETF) that now allows the redemption of shares in cash, through its redemption. program.
However, ETH Trusts noted that they do not have a redemption program and require written permission from the sponsor to sell or dispose of the shares. Genesis has requested that the written consent be revoked.
Cointelegraph recently reported that there has been a massive exodus of investors selling their GBTC shares since the GBTC conversion.
January 22, the bankrupt cryptocurrency exchange FTX sold 22 million GBTC shares, nearly $1 billion, completely liquidated holdings.
Related: BlackRock and ProShares Bitcoin ETFs Surpass GBTC's Daily Trading Volume
However, Genesis has announced that it intends to increase its sales from crypto assets.
“Both the Debtors and Gemini shall use their reasonable best efforts in good faith to maximize the market value of any Trust Assets or Initial GBTC Shares and to maximize the proceeds from any sales or any redemptions,” the filing said.
Magazine: GBTC drops BTC share by 21%, Celsius pulls out of bankruptcy, and more: Hodler's Digest, January 28 – February 3
