Bankrupt crypto lending firm Genesis recently converted approximately 36 million shares of Grayscale Bitcoin Trust (GBTC) into Bitcoin in order to settle its debts with creditors. The company liquidated the GBTC shares on April 2 at a value of around $58.50 per share. The share price of GBTC has surged by approximately 50% since Genesis sought permission from the U.S. bankruptcy court to sell the shares, with the total amount generated from the sale amounting to $2.1 billion. Genesis was able to acquire 32,041 Bitcoin on April 2 at a price of $65,685 per Bitcoin, which will be used to fulfill its obligations towards creditors.
Coinbase reassured the cryptocurrency community that the majority of the proceeds from the GBTC sell-off would remain within the crypto ecosystem, having a neutral overall effect on the market. The bankruptcy plan allowed Genesis to either convert GBTC shares into Bitcoin assets on behalf of the creditors or sell the shares outright and distribute the cash. Digital Currency Group’s subsidiary, Genesis, has proposed to pay its customers more than their actual entitlements. In a bankruptcy court filing last month, Genesis announced a settlement agreement with the SEC, agreeing to pay $21 million to resolve a civil lawsuit.
In November 2022, Gemini Earn had approximately 340,000 customers and $900 million in assets under management as stated in the SEC’s lawsuit. Genesis temporarily suspended Gemini Earn withdrawals following FTX’s bankruptcy due to “unprecedented market turmoil” and liquidity issues. Genesis filed for bankruptcy after the SEC’s lawsuit was filed in January of the previous year. In a settlement with New York’s financial regulator, Gemini agreed to return $1.1 billion to Gemini Earn customers through the Genesis bankruptcy proceeding. A federal judge ruled that the SEC’s lawsuit against crypto firms Gemini and Genesis will proceed in court, after the companies attempted to have the lawsuit, which alleges the sale of unregistered securities through the Gemini Earn program, dismissed.
The significant Bitcoin purchase by Genesis comes after Coinbase stated that the funds from the GBTC sell-off are likely to remain within the crypto ecosystem. These acquired Bitcoins hold a current value of approximately $2.18 billion. The move to convert GBTC shares into Bitcoin assets was part of preparations to settle the company’s debts with creditors. Genesis had initially sought permission from the U.S. bankruptcy court to sell the shares when they were priced at $38.50. The total amount generated from the sale amounted to $2.1 billion, enabling Genesis to acquire 32,041 Bitcoin on April 2 at a price of $65,685 per Bitcoin.
The judge’s decision to allow the SEC’s lawsuit against Gemini and Genesis to proceed in court came after the companies attempted to have the lawsuit dismissed. In a 32-page order, New York District Court Judge Edgardo Ramos rejected the motions to dismiss, stating that the SEC’s allegations were plausible enough to continue with the legal proceedings. Additionally, the judge denied a separate request by the companies to halt the SEC’s demand to cease selling securities and to hand over Gemini Earn profits if the SEC prevails in the lawsuit.Genesis has settled with the SEC in a bankruptcy court filing, agreeing to pay $21 million to resolve a civil lawsuit.
