Genesis Seeks Court Approval to Offload $1.4 Billion in GBTC Assets Post-SEC Settlement

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After reaching an agreement with the U.S. Securities and Exchange Commission (SEC), the bankrupt company Genesis Global Capital has submitted a petition to the bankruptcy court to dispose of holdings from Grayscale’s Bitcoin Trust, Ethereum Trust, and Ethereum Classic Trust. These assets are estimated to be worth approximately $1.59 billion, and the debtors argue that selling and converting the trust assets into cash would mitigate any potential risks associated with price volatility to the estate and aid in the allocation of funds to creditors.

Genesis Seeks Bankruptcy Court Nod for Crypto Trust Asset Liquidation

In a legal document submitted by Genesis, the shuttered cryptocurrency company intends to offload its holdings in GBTC, ETHE, and ETCG. Genesis clarifies that the bankruptcy court’s committee, the ad hoc group, and Gemini have consented to back the proposal. The document states that the suggested deals ought to be sanctioned without any liens, claims, or obstacles. Additionally, Genesis is required to obtain approval from the sponsor, Grayscale, before proceeding with the sale, transfer, or redemption of the shares.

The motion states:

The debtors believe it would be beneficial to have the authority to sell and liquidate the trust assets to reduce any risk that fluctuations in price might have on the debtors’ estates and to facilitate distributions to creditors.

The request for a proposed sale comes in the wake of recent weeks’ GBTC outflows, which resulted in the trust’s bitcoin holdings decreasing from 617,079.99 BTC on Jan. 12 to the present 478,337.43 BTC. Concurrently, GBTC’s assets under management (AUM) have diminished from $26.93 billion to the current estimate of $20.53 billion. This move to sell follows Genesis’ settlement with the SEC, where the firm was mandated to disburse $21 million to the U.S. financial watchdog.

After Genesis submitted its court filing, Gemini shared on its website its satisfaction with the development. “Late yesterday, Genesis filed a motion authorizing [the] sale of trust assets. This is an important step forward following the approval of the Grayscale Bitcoin Trust (GBTC) as an exchange-traded product (ETP) on January 10th,” the company stated.

What do you think about Genesis’ plan to offload trust shares? Let us know what you think about this subject in the comments section below.

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