Genesis Global, a leading digital asset trading firm, has received approval from the bankruptcy court to sell a substantial number of shares in Grayscale Bitcoin Trust (GBTC). This decision, made by U.S. Bankruptcy Judge Sean Lane during a court hearing in New York, grants Genesis the authority to liquidate its holdings, including Grayscale Ethereum Trust and Grayscale Ethereum Classic Trust. The estimated value of the shares is approximately $1.3 billion, making this a significant development in the cryptocurrency industry.
In addition to the GBTC shares, Genesis plans to sell over 11 million shares in two Grayscale Ethereum Trusts, with a combined value exceeding $200 million. This strategic move aims to generate a total of approximately $1.6 billion from the sale of the three trusts combined. The court filing from February 2 outlines Genesis’ intent to monetize its holdings, allowing for potential recoveries for its creditors.
Genesis’ parent company, Digital Currency Group (DCG), attempted to delay the proposed sale until the bankruptcy court presents its decision on the subsidiary’s debt repayment plan later this month. DCG expressed concerns about potential price depreciation resulting from premature share sales, which could ultimately affect the recovery amounts for Genesis’ creditors. Jeffrey Saferstein, representing DCG, emphasized the need for caution to avoid any adverse effects on market prices.
Furthermore, DCG sought the right to provide input on the sale of Grayscale shares. Despite these objections, Judge Sean Lane ruled in favor of Genesis, acknowledging the company’s decision-making authority regarding the strategic sale of its assets. Lane emphasized that the sale would be conducted gradually with the assistance of a trusted broker to avoid any rapid and disruptive unloading of shares.
Judge Lane justified his decision by recognizing the “considerable expertise” of Genesis and its creditors in the crypto space. This acknowledgement suggests that they are well-equipped to maximize the value of the Grayscale shares. With the court’s approval, Genesis can move forward with its planned liquidation strategy, which involves shutting down the company and repaying customers in either cash or cryptocurrencies based on their deposits.
Earlier this month, Genesis reached settlements with both the U.S. Securities and Exchange Commission (SEC) and the New York Attorney General Letitia James, addressing their objections to the bankruptcy plan. Under the terms of these agreements, if Genesis has surplus funds left after repaying customers, it will pay a $21 million fine to the SEC. Additionally, any funds recovered through the bankruptcy process will be allocated to assist creditors allegedly defrauded by Genesis, as determined by the New York Attorney General.
The approval of Genesis Global’s sale of Grayscale Bitcoin Trust shares by the bankruptcy court marks a significant milestone for the company and the broader cryptocurrency industry. This decision empowers Genesis to monetize its holdings strategically, generating substantial value from its investments. With the expertise of both Genesis and its creditors, the value of the Grayscale shares can be maximized, benefitting all parties involved in the liquidation process.
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