Outside Source
Troubled crypto lending firm Genesis has reportedly bought $2.1 billion worth of Bitcoin (BTC) after selling off approximately 36 million shares of the Grayscale Bitcoin Trust (GBTC).
According to a Bloomberg Law report citing court documents filed on April 5, Genesis sold 36 million of its GBTC shares and used the proceeds to buy 32,041 Bitcoins, which it hopes to use to repay creditors.
The New York bankruptcy court authorized the decision to sell the GBTC shares on Feb. 14, alongside shares from Grayscale Ethereum (ETH) trusts. Genesis initially sought permission when the GBTC shares were valued at nearly $1.4 billion.
Similarly, its shares in Grayscale Ethereum Trust were valued at $165 million, and its Grayscale Ethereum Classic Trust shares were valued at $38 million.
These valuations have changed significantly with the recent surge in Bitcoin prices. At the current Bitcoin price of around $68,000, the coins purchased with the proceeds from the GBTC shares alone are now worth nearly $2.2 billion.
The bankrupt crypto lender plans to distribute these coins to its Gemini Earn creditors as part of its repayment strategy. This development follows arguments from the Digital Currency Group (DCG), Genesis’s parent company, regarding the proposed repayment plan, which DCG claims would overpay lenders.
The crypto community’s response to the move has been mixed. While cryptocurrency exchange Coinbase reassured that the sell-off would likely stay within the crypto ecosystem without major market disruptions, concerns linger regarding the potential impact on GBTC and the broader crypto industry.
Genesis’s financial struggles stem from the fallout of the FTX bankruptcy in late 2022, which disrupted its lending operations and pressured it to repay substantial locked deposits. It led Genesis to explore various options, including hiring investment bank Moelis & Co., and announcing a 30% workforce reduction.
The bankruptcy filing affected Genesis and raised questions about the stability of Grayscale Bitcoin Trust. Market observers were particularly wary of a potential liquidation of over 600,000 Bitcoins linked to the Genesis bankruptcy.
Amidst these challenges, the crypto lender recently settled a lawsuit with New York Attorney General Letitia James over allegations related to its Earn program. The settlement aims to return assets to former Earn customers and other Genesis creditors, pending approval by a bankruptcy judge.
This article first appeared at crypto.news
