Genesis Gets Green Light: $1.3 Billion GBTC Sale Sparks Market Questions

Genesis Defies Parent Company, Wins GBTC Sale Approval

The ruling , issued on Wednesday, also sanctioned the sale of about 8.7 million shares of Grayscale Ethereum Trust and nearly three million shares of Grayscale Ethereum Classic Trust, marking a pivotal moment in the ongoing bankruptcy proceedings of the cryptocurrency lender.

Genesis Global recently disclosed in a court filing that the combined value of its Grayscale shares, targeted for sale, amounted to approximately $1.6 billion as of late January.

During a court hearing, Sean O’Neal, representing Genesis, emphasized the necessity of judicial approval for the sale or transfer of these Grayscale assets.

Bitcoin is about to fall.

Sentiment is overheated.

Genesis cleared by court to sell GBTC shares worth $1.3 billion.

Perfect buying opportunity coming up.

— Ulrik K. Lykke (@ulriklykke) February 15, 2024

This step is crucial as Genesis prepares for its wind-down under the Chapter 11 bankruptcy plan, with a confirmation hearing scheduled later this month. The move underscores the crypto lender’s efforts to navigate through its bankruptcy proceedings effectively.

Genesis Global has been authorized by the court to liquidate its Grayscale shares, either into Bitcoin or cash, as part of its strategy to pay back creditors under its Chapter 11 bankruptcy plan. Sean O’Neal, the attorney for Genesis, highlighted that this judicial approval is a pivotal step in adhering to the stipulations of the Chapter 11 plan.

Liquidating Shares for Creditor Repayment

However, this decision has been met with opposition from Digital Currency Group (DCG), Genesis’s parent company, which has been vocal in its objections to the Chapter 11 plan proposed by Genesis. DCG argued in a court filing that any decisions regarding the sale of assets should be deferred until after the plan’s confirmation hearing.

They contend that the timing of the authorization, coming shortly before the confirmation hearing, is impractical. DCG pointed out that Genesis has been in possession of these shares since November 2022, suggesting there had been ample opportunity to request sale authorization sooner.

1/ The FTX bankruptcy estate sold more than $1 billion worth of GBTC.

Many have celebrated as GBTC Outflows have recently slowed, but unfortunately, there's more selling on the horizon.

Another bankruptcy estate is planning to sell billions worth of GBTC soon- Genesis. pic.twitter.com/QH8qXUqWKS

— Sam Callahan (@samcallah) February 13, 2024

Jeffrey Saferstein, representing DCG, emphasized this point, questioning the timing and necessity of the request at this juncture.

“We’re not necessarily opposed to a sale here. But if they’re going to go forward with sales, we obviously want to make sure it’s done right,” he stated .

Genesis Global’s decision to delay seeking court approval for the sale of its Grayscale shares until after GBTC’s conversion to an exchange-traded fund (ETF) was strategic, according to O’Neal. The conversion, which occurred last month following the SEC’s approval of the country’s first Bitcoin-holding ETFs, significantly increased the value of GBTC shares. O’Neal highlighted the sharp rise in share value following the ETF conversion as a crucial factor in the timing of their request.

A Strategic Sale Amid Crypto Turmoil

However, this move faced criticism from Digital Currency Group (DCG), with attorney Jeffrey Saferstein arguing that DCG, as the creator of GBTC and a highly knowledgeable entity regarding these assets, should be consulted before any sale of Grayscale shares. Despite DCG’s objections and claims of being the most informed party concerning these assets, Judge Sean Lane dismissed DCG’s request, pointing to an “inherent conflict.”

"UK falls into recession" + "Genesis Cleared by Court to Sell GBTC Shares Worth $1.3 Billion" from yesterday.
More to come.

Look @ the #BTC     chart.
Look @ the $SPX chart.

FUD's loading. I don't make the rules. pic.twitter.com/nfx9ZoZpb0

— 🎯 Master (@Moneytaur_) February 15, 2024

The court’s approval on Wednesday to proceed with the sale included 31.2 million GBTC shares, which were recently at the center of an ownership dispute that Genesis won against the crypto exchange Gemini Trust. Both Gemini and other creditors showed support for Genesis’s plea for court authorization to sell GBTC shares.

Genesis’s move to file for bankruptcy in January 2023 came in the wake of the FTX crypto exchange collapse, marking a significant event in the ongoing challenges within the cryptocurrency industry.

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About the Author

Teuta Franjkovic

Teuta is a seasoned writer and editor with more than 15 years of experience. She has expertise in covering macroeconomics and technology as well as the cryptocurrency and blockchain industries. She has worked for several publications as a journalist and editor, including Forbes, Bloomberg, CoinTelegraph, Coin Rivet, CoinSpeaker, VRWorld and Arcane Bear. Teuta began her professional career in 2005, working as a lifestyle writer at Cosmopolitan in Croatia. From there, she branched out to several other publications, covering mainly business and the economy. She then turned her attention to the world of cryptocurrency and blockchain, believing that crypto is among the most important inventions in the history of humanity. Her involvement in fintech began in 2014 and she has since lent her expertise in writing, editing and gathering information about the world of crypto, blockchain, NFTs and Web3. An all-round news hound, mentor, editor, and writer, Teuta enjoys teamwork and good communication. She holds a WSET2 diploma and has a thing for chablis, punkrock music and shoes. She also holds a double MA in Political science and Entrepreneurship.

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