Genesis Global, a subsidiary of Digital Currency Group, has recently gained approval from the bankruptcy court to sell approximately 35 million shares of Grayscale Bitcoin Trust (GBTC). With an estimated value of $1.3 billion, this decision by U.S. Bankruptcy Judge Sean Lane has generated both excitement and concerns in the crypto community.
During a court hearing in White Plains, New York, Judge Lane granted Genesis Global the authority to monetize its holdings not only in GBTC but also in Grayscale Ethereum Trust (ETHE) and Grayscale Ethereum Classic Trust (ETCG). The court filing from February 2 revealed that Genesis also plans to sell over 11 million ETHE shares, amounting to a total value exceeding $200 million. As a result, the combined value of all shares to be sold by Genesis reaches approximately $1.6 billion.
Genesis’s parent company, Digital Currency Group, attempted to delay the proposed sale until after the bankruptcy court decides on the subsidiary’s debt repayment plan later this month. Concerns were raised that premature Grayscale share sales could lead to a decrease in prices, diminishing potential recoveries for Genesis creditors. Jeffrey Saferstein, representing DCG, also emphasized the need for careful consideration to avoid the rapid unloading of shares. Additionally, DCG sought the right to provide input on the selling of Grayscale shares.
Despite objections from DCG, Judge Sean Lane ruled in favor of Genesis, asserting the company’s right to determine the strategic sale of its assets. The judge highlighted the “considerable expertise” of Genesis and its creditors in the crypto field, suggesting that they are well-equipped to maximize the value of the Grayscale shares. To address concerns about potential negative effects on prices, Judge Lane specified that the sales would be conducted gradually with the assistance of a broker.
Alongside the approved share sales, Genesis is proceeding with its liquidation plan, which involves the closure of the company and the repayment of customers either in cash or cryptocurrency, depending on their deposits. Earlier this month, Genesis reached settlements with the U.S. SEC and New York Attorney General Letitia James, resolving their objections to the bankruptcy plan. The settlements dictate that if Genesis has any surplus funds after repaying customers, it must pay a $21 million fine to the SEC. Also, any funds recovered from the bankruptcy proceedings will be allocated by the New York Attorney General to assist creditors allegedly defrauded by Genesis.
The approval of Genesis Global to sell Grayscale Bitcoin Trust shares marks a significant development in the bankruptcy proceedings. While it opens up opportunities for Genesis to repay its debts and provide potential recoveries to creditors, concerns have been raised about potential price depressions and the rapid unloading of shares. Judge Lane’s ruling in favor of Genesis underlines the confidence placed in the company’s expertise and responsible strategic approach. As Genesis moves forward with its liquidation plan, the future outcomes of the share sales and their impact on cryptocurrency markets remain to be seen.
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