Genesis Global has received approval from a bankruptcy court to sell approximately 35 million shares of Grayscale Bitcoin Trust (GBTC) worth $1.3 billion, Bloomberg News reported on February 14.
The decision handed down by Judge Sean Lane allows Genesis to liquidate its GBTC shares for bitcoin or cash. This sale is expected to inject significant liquidity into Genesis, which has been experiencing financial difficulties.
Genesis also plans to offload more than 11 million shares in two Grayscale Ethereum Trusts, further boosting its assets to more than $200 million.
Genesis, a subsidiary of Digital Currency Group (DCG), has faced significant headwinds following the collapse of several major companies in the cryptocurrency sector. The company’s decision to suspend user withdrawals following the FTX incident highlights the liquidity crisis that has plagued many cryptocurrency companies amid the harsh “crypto winter.”
Court approval is an important step for Genesis to proceed with bankruptcy proceedings and stabilize its financial position.
DCG fails to postpone sale
The ruling comes at a critical time for Genesis amid the parent company’s broader financial strategy and restructuring efforts.
DCG and Grayscale opposed the sale, with the former seeking to delay it until a final decision is made on the proposed debt repayment plan. There were concerns that if the court rejected the repayment strategy, the sale could proceed prematurely.
Nonetheless, the court’s decision points the way forward for Genesis and DCG amid their ongoing financial restructuring.
This move follows the successful conversion of Grayscale’s flagship GBTC fund to a spot Bitcoin ETF. Despite the ETF’s highest trading volume since its launch last month, it has experienced significant declines in value, losing more than $6 billion.
SEC, NYAG Settlement
In addition to liquidating its assets, Genesis recently agreed to a $21 million settlement with the Securities and Exchange Commission (SEC) on charges related to its Gemini Earn program.
Genesis also settled a lawsuit filed by New York Attorney General Letitia James regarding the Earn program, resolving claims that the company defrauded investors through the Earn program. As part of the settlement, Genesis agreed to cease operations in New York.
Additionally, Genesis was recently fined $8 million by the New York State Department of Financial Services (DFS) for compliance failures that violated DFS’ virtual currency and cybersecurity regulations. These failures left the company vulnerable to illegal activities and cybersecurity threats.