Genesis Global Capital, a crypto lending firm that filed for bankruptcy last month, came into the spotlight. Because he asked the judge to approve the sale of his assets, which include $ 1.4 billion in shares of Grayscale Bitcoin Trust (GBTC). Here are the details…
Genesis, Grayscale at risk of selling Bitcoin and Ethereum funds
Genesis, a subsidiary of Grayscale’s parent company Digital Currency Group, has sought approval to sell GBTC shares. Apart from this, altcoin trusts worth approximately $200 million in total are also on the agenda. Because he also wants to sell Grayscale Ethereum Trust (GETH) and Grayscale Ethereum Classic Trust (GETC) shares. Genesis gained attention with a motion filed in the U.S. Bankruptcy Court in the Southern District of New York on Sunday. Specifically, he wants the authority to sell trust assets to maximize their value and pay his creditors. The company notes that the trust’s assets are subject to significant price fluctuations and liquidity risk. He also claims that selling them now will prevent further losses.
The request also asks the court to shorten the notice period and hold the hearing on the sale request on Thursday, February 8, the same day as the bankruptcy case’s next scheduled status conference. The trust assets are part of Genesis’ collateral to Gemini, a crypto exchange and custodian, as part of Genesis’ participation in the Gemini Earn program, which allows Genesis to lend and earn interest on crypto assets. But the program was shut down by the Securities and Exchange Commission (SEC) in January after the regulator accused Genesis of violating securities laws and operating an unregistered securities offering.
SEC filed a lawsuit against Genesis and its CEO
The SEC also said Genesis failed to disclose risks and conflicts of interest involved in the program. He also alleged that he misrepresented the nature and value of the trust assets. The institution filed a lawsuit against Genesis and its CEO Michael Moro, asking for their assets to be frozen. He also asked for civil penalties to be imposed. Earlier this week, Genesis agreed to settle the SEC’s charges by paying a $21 million penalty, which they will deduct from the proceeds of the sale of the trust’s assets. The agreement is subject to court approval.
However, ownership of some of the trust’s assets is still disputed, as Genesis claims rights to an additional 31,180,804 GBTC shares (worth approximately $1.2 billion) that were pledged to Gemini but never transferred. Genesis argues that these shares are part of the bankruptcy estate and should be included in the sale request. Gemini, on the other hand, claims that these shares belong to it and Genesis has no right to sell them. The court is considering this sale transaction, which will have an impact on the outcome of the bankruptcy case. It has also not yet made a decision on this issue, which will have a significant impact on the distribution of the foundation’s assets.
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