In a strategic move to address its financial obligations amid bankruptcy proceedings, Genesis, a crypto lending firm, has undertaken a significant action. This involves the conversion of approximately 36 million shares of Grayscale Bitcoin Trust (GBTC) into Bitcoin assets. This maneuver serves as part of the company’s strategy to settle its outstanding debts with creditors.
As reported by Bloomberg, the conversion of GBTC shares into Bitcoin occurred on April 2, with each share valued at around $58.50 at the time of liquidation. Interestingly, the decision to convert the shares comes amidst a notable surge in the share price of GBTC, which had seen a remarkable uptick of approximately 50% since Genesis initially sought approval from the U.S. bankruptcy court to divest these shares.
The process of offloading the GBTC shares commenced back on February 2 when the shares were priced at $38.50. Since then, Genesis has been navigating through its bankruptcy proceedings while strategically managing its assets to address its financial obligations. This move signifies Genesis’ proactive approach to managing its financial affairs and underscores its commitment to creditors amidst the challenges posed by its bankruptcy status.
Genesis makes a significant investment of $2.1 billion in Bitcoin assets.
The sale yielded $2.1 billion, enabling Genesis to purchase 32,041 Bitcoin on April 2 at $65,685 per Bitcoin. These Bitcoins will fulfill Genesis’ obligations to its creditors. As of now, the value of these 32,041 Bitcoin is approximately $2.18 billion.
Genesis purchases $2.1B of Bitcoin following GBTC sell-off
The significant Bitcoin purchase comes after Coinbase declared that the majority of the proceeds from the GBTC sell-off would “remain within the crypto ecosystem.”
Bankrupt crypto lending firm Genesis reportedly… pic.twitter.com/wthYyOpyIu
— Giannis Andreou (@gandreou007) April 6, 2024
Coinbase’s reassurance regarding the impact of Genesis’s large sell-off on the crypto market aimed to allay concerns within the community. They emphasized that the funds resulting from this transaction are likely to remain within the crypto ecosystem, thereby having a neutral overall effect on the market dynamics.
This reassurance stems from the understanding that Genesis, under its bankruptcy plan, has two main options: converting the GBTC shares into Bitcoin assets on behalf of the creditors or selling the shares outright and distributing the cash. Both options ensure that the funds stay within the realm of cryptocurrencies, preventing any significant disruption to the broader market.
The decision by Genesis to convert its GBTC shares into Bitcoin assets underscores its commitment to fulfilling its obligations to creditors while also optimizing its holdings in line with prevailing market conditions. This move reflects the company’s strategic approach to managing its assets amidst evolving market dynamics.
Furthermore, Digital Currency Group’s acknowledgment of Genesis’s proposal to pay its customers more than their actual entitlements adds another layer of context to the situation. This demonstrates Genesis’s proactive efforts to prioritize its customers’ interests and mitigate any potential financial risks associated with its bankruptcy proceedings.
Overall, Coinbase’s clarification, coupled with Genesis’s strategic moves and Digital Currency Group’s supportive stance, instills confidence in the stability and resilience of the crypto market amidst significant transactions and regulatory developments.
Genesis reaches a settlement with the SEC.
In a recent bankruptcy court filing, Genesis disclosed that it has reached a settlement agreement with the Securities and Exchange Commission (SEC), bringing an end to a civil lawsuit. The terms of the settlement entail Genesis paying $21 million to resolve the SEC’s claims. This legal resolution stems from events that unfolded in November 2022 when Gemini Earn, a subsidiary of Genesis, boasted about 340,000 customers and managed assets amounting to $900 million. However, the SEC’s lawsuit alleged violations related to the handling of customer funds.
Following a tumultuous period, including the bankruptcy of FTX, Genesis temporarily halted withdrawals from the Gemini Earn platform, citing unprecedented market instability and liquidity challenges. Subsequently, Genesis filed for bankruptcy in response to the SEC’s lawsuit, which had been initiated in January of the previous year.
In February, another significant development occurred as Gemini, in agreement with New York’s financial regulatory body, consented to reimburse approximately $1.1 billion to Gemini Earn customers through the bankruptcy proceedings of Genesis. This settlement was a strategic move to address the fallout from the regulatory scrutiny surrounding Gemini Earn.
However, legal proceedings persisted as a federal judge recently ruled against Gemini and Genesis in their attempt to dismiss the SEC’s lawsuit. The judge, Edgardo Ramos, determined that the SEC’s allegations, particularly regarding the sale of unregistered securities through the Gemini Earn program, were credible enough to warrant further legal action.
Judge Ramos’ decision also denied a separate request by Gemini and Genesis to halt the SEC’s enforcement actions, which included demands to cease the sale of securities and surrender profits generated from Gemini Earn if the SEC ultimately prevails in the litigation. This ruling underscores the ongoing legal challenges faced by crypto firms amidst regulatory scrutiny and highlights the complexities of navigating the evolving regulatory landscape in the cryptocurrency industry.
further reading: Coinbase assures that the Genesis GBTC sell-off will not cause disruptions in the cryptocurrency markets.
