Genesis, a crypto lending firm facing bankruptcy, has transformed roughly 36 million shares of Grayscale Bitcoin Trust (GBTC) into Bitcoin as part of its strategy to address outstanding debts with creditors.
According to recent findings from Bloomberg, the company completed the liquidation of the GBTC shares on April 2, at a value of approximately $58.50 per share during that period.
Interestingly, the GBTC share price has seen a significant uptick of around 50% since Genesis initially sought approval from the U.S. bankruptcy court to divest the shares.
Starting from February 2, when the shares were valued at $38.50, Genesis commenced the process of selling off the GBTC shares.
Genesis Buys $2.1 Billion Worth of Bitcoin
The sale resulted in a total sum of $2.1 billion, empowering Genesis to obtain 32,041 Bitcoin on April 2, purchasing each Bitcoin at a rate of $65,685.
These newly acquired Bitcoins are earmarked by Genesis to meet its obligations towards creditors. As of the current moment, the 32,041 Bitcoin holds an approximate value of $2.18 billion.
Addressing concerns regarding the potential repercussions of this substantial sell-off on the crypto market, cryptocurrency exchange Coinbase has reassured the community that the funds are likely to remain within the crypto ecosystem, thereby exerting a neutral overall influence on the market.
Coinbase clarified that the bankruptcy strategy allows Genesis the option to either convert GBTC shares into Bitcoin assets on behalf of the creditors or liquidate the shares outright and distribute the proceeds.
This action follows Digital Currency Group’s statement that its subsidiary, Genesis, has proposed to compensate its customers with amounts exceeding their actual entitlements.
Genesis Settles with the SEC
Last month, in a filing with the bankruptcy court, Genesis disclosed that it had reached a settlement agreement with the SEC, consenting to pay $21 million to resolve the civil lawsuit.
According to the SEC’s lawsuit, in November 2022, Gemini Earn boasted approximately 340,000 customers and managed assets totaling $900 million.
Following FTX’s bankruptcy in the same month, Genesis temporarily halted Gemini Earn withdrawals, citing “unprecedented market turmoil” and liquidity concerns.
Genesis initiated bankruptcy proceedings subsequent to the SEC’s lawsuit, which was filed in January of the preceding year.
In February, Gemini agreed to reimburse $1.1 billion to Gemini Earn customers via the Genesis bankruptcy process, as part of a resolution with New York’s financial regulator.
More recently, a federal judge has ruled that the SEC’s lawsuit against crypto firms Gemini and Genesis will proceed to trial.
This decision comes after Gemini and Genesis attempted to have the lawsuit, which accuses them of selling unregistered securities through the Gemini Earn program, dismissed.
In a 32-page order, New York District Court Judge Edgardo Ramos rejected the motions to dismiss filed by Gemini and Genesis. Judge Ramos stated that the SEC’s allegations were sufficiently plausible to warrant continuation of the legal proceedings.
Additionally, the judge denied a separate request by the companies to suspend the SEC’s demand for them to cease selling securities and to surrender Gemini Earn profits if the SEC succeeds in the lawsuit.
