Bankrupt Genesis Seeks Court Approval to Liquidate $1.6 Billion Crypto Assets
Summary:
Genesis, a failing cryptocurrency lending firm, has sought permission from the U.S Bankruptcy Court in New York to liquidate its $1.6 billion assets in Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE), and Grayscale Ethereum Classic Trust (ETCG). Aiming to increase available funds for creditors and minimize price fluctuation risks, Genesis stated its crucial need for the court's approval. The ongoing conversion of GBTC into a Bitcoin exchange-traded fund (ETF) has observed significant divestment from investors. Despite selling off most of its holdings, Genesis, along with Gemini, intends to maximize returns from the crypto asset sales.
The collapsing cryptocurrency lending entity, Genesis, has petitioned the U.S Bankruptcy Court in the Southern District of New York to authorize a liquidation of its assets staked in several trusts: Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE), and Grayscale Ethereum Classic Trust (ETCG). These assets are valued close to $1.6 billion in aggregate. In a recent submission to the court, Genesis underscored the pressing need to acquire consent to offload the trust assets preemptively, given the potential price fluctuations of the underlying cryptocurrencies: Bitcoin(BTC), Ethereum (ETH), and Ethereum Classic (ETC). Genesis's objective in this move is to augment the funds available for allocation to its creditors.
The firm outlined in the court filing its aim to curtail any risk that might arise from price volatility that could impact the firm's overall value, whilst ensuring creditors receive their due. Upon approval from the U.S Securities and Exchange Commission (SEC) on January 10, the conversion of GBTC into a Bitcoin exchange-traded fund (ETF) that allows redemptions in cash has taken effect. Since this recent convertibility, a notable outflow of investors divesting from their GBTC shares has been observed.
On January 22, the bankrupt cryptocurrency trading platform FTX offloaded 22 million GBTC shares, priced almost at a billion dollars. This trade-off represented more than two-thirds of its total holdings. Nevertheless, Genesis is resolute in its pledge to optimize the sale returns from these crypto assets as stated in the filing. Both Genesis and Gemini have made a commitment to exert all possible efforts, in good faith and reasonable diligence, to maximize the market price of all Trust Assets or Initial GBTC shares, as well as the proceeds originating from any sales or redemptions therein.
Published At
2/4/2024 4:44:09 AM
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