- Genesis, the bankrupt crypto lender, has sought approval from a U.S. judge to sell over $1.6 billion in Bitcoin (BTC), Ethereum (ETH), and Ethereum Classic (ETC) held in Grayscale’s trust products.
- Genesis’ assets consist of nearly $1.4 billion in Grayscale Bitcoin Trust (GBTC), now converted into a spot exchange-traded fund (ETF). It holds $165 million in Grayscale Ethereum Trust and $38 million in Grayscale Ethereum Classic Trust.
- Genesis is now seeking an additional 31 million GBTC shares pledged to Gemini but never transferred, adding a layer of complexity.
The company filed for bankruptcy in November 2023, citing losses and industry-wide turmoil. The sale of cryptocurrency holdings is likely intended to help repay creditors and navigate bankruptcy proceedings.
If the motion gains approval, the market could experience significant selling pressure on Bitcoin. A similar scenario unfolded in January when bankrupt exchange FTX sold over $1 billion worth of GBTC holdings, coinciding with a drop in Bitcoin’s price from $49,000 to $39,000.
Genesis and Grayscale’s Role in DCG’s Crypto Empire
Genesis and Grayscale, integral components of Digital Currency Group’s (DCG) crypto empire, faced setbacks in 2022, contributing to Genesis’ eventual bankruptcy declaration.
DCG, led by Genesis and Grayscale, experienced losses and controversies amid the collapse of prominent funds and exchanges in 2022. This triggered a domino effect, leading to Genesis’ bankruptcy.
Top Creditor and User Impact
Gemini emerges as Genesis’ largest creditor, estimating that over 100,000 of its users are affected by the bankruptcy, collectively owed between $1 billion and $10 billion. This underscores the broader impact of such financial turmoil on the crypto community.
Genesis owes over $3.5 billion to its top 50 creditors, including notable entities like trading giant Cumberland, Mirana, MoonAlpha Finance, and VanEck’s New Finance Income Fund, highlighting the extensive financial obligations at play.
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