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HomeCryptoGenesis Purchases $2.1 Billion in Bitcoin Following GBTC Share Sale
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Genesis Purchases $2.1 Billion in Bitcoin Following GBTC Share Sale

In a strategic move aimed at addressing financial woes, troubled crypto lending firm Genesis has reportedly acquired $2.1 billion worth of Bitcoin (BTC) after divesting approximately 36 million shares of the Grayscale Bitcoin Trust (GBTC).

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As per a report by Bloomberg Law referencing court documents filed on April 5, Genesis executed the sale of 36 million GBTC shares, subsequently utilizing the proceeds to procure 32,041 Bitcoins. The firm intends to leverage these newly acquired assets to settle outstanding debts with creditors.

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The decision to offload the GBTC shares was authorized by the New York bankruptcy court on February 14, alongside shares from Grayscale Ethereum (ETH) trusts. Originally seeking approval when the GBTC shares were valued at nearly $1.4 billion, Genesis has since witnessed a notable surge in Bitcoin prices, resulting in the coins purchased with the proceeds now valued at almost $2.2 billion at the current Bitcoin price of approximately $68,000.

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The bankrupt crypto lender plans to allocate these acquired coins to its Gemini Earn creditors as part of its repayment strategy. However, the Digital Currency Group (DCG), Genesis’s parent company, has voiced concerns over the proposed repayment plan, contending that it may lead to overcompensation for lenders.

The response from the cryptocurrency community has been mixed, with cryptocurrency exchange Coinbase expressing confidence that the sell-off would remain contained within the crypto ecosystem, thus mitigating potential market disruptions. Nonetheless, apprehensions persist regarding the ramifications for GBTC and the broader crypto industry.

Genesis’s financial challenges stem from the fallout of the FTX bankruptcy in late 2022, which disrupted its lending operations and exerted pressure to repay substantial locked deposits. In response, Genesis pursued various avenues, including enlisting the services of investment bank Moelis & Co. and announcing a 30% reduction in its workforce.

The bankruptcy filing cast a shadow over Genesis and raised concerns about the stability of the Grayscale Bitcoin Trust, particularly regarding the potential liquidation of over 600,000 Bitcoins linked to the Genesis bankruptcy.

Despite these hurdles, the crypto lender recently reached a settlement with New York Attorney General Letitia James regarding allegations related to its Earn program. The settlement aims to restore assets to former Earn customers and other Genesis creditors, pending approval by a bankruptcy judge.

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