Genesis Global Approved to Sell $1.3 Billion in GBTC Shares
Genesis Global, a subsidiary of Digital Currency Group, has received approval from a bankruptcy court to sell approximately 35 million shares of the Grayscale Bitcoin Trust (GBTC) for a value of $1.3 billion. This sale will provide Genesis with much-needed liquidity as it navigates through financial difficulties.
Approval Delivered by Judge Sean Lane
Judge Sean Lane granted the approval on February 14th, allowing Genesis to liquidate its GBTC shares into Bitcoin or cash. This move will bring significant liquidity to Genesis. The company also plans to sell over 11 million shares in two Grayscale Ethereum Trusts, further strengthening its financial position with an additional $200 million.
Challenges and Bankruptcy Proceedings
Genesis has faced challenges following the collapse of major projects and players in the crypto industry. The FTX collapse forced the company to halt user withdrawals, highlighting the liquidity crisis that many crypto firms have experienced. The court approval now enables Genesis to navigate bankruptcy proceedings and stabilize its financial situation.
Opposition from DCG and Grayscale
Grayscale and its parent company, Digital Currency Group, have opposed the sale. Grayscale seeks a postponement until a decision is made on a proposed debt repayment plan. Grayscale is concerned that proceeding with the sale prematurely could impact the court’s final decision on the repayment strategy. Another reason for Grayscale’s opposition is the timing of the sale, which comes after the GBTC fund transitioned into a Bitcoin ETF and experienced a significant reduction in value.
SEC Settlement and Compliance Issues
Genesis has agreed to a $21 million settlement with the Securities and Exchange Commission (SEC) over allegations related to the Gemini Earn program. Additionally, the company settled a lawsuit with the New York Attorney General Letitia James. As part of the settlement, Genesis will cease operations in New York. The company was also fined $8 million by the New York State Department of Financial Services for non-compliance with virtual currency and cybersecurity regulations.
Conclusion
Genesis Global has obtained court approval to sell its Grayscale Bitcoin Trust (GBTC) shares, injecting much-needed liquidity into the company. The decision comes at a critical time for Genesis, which has been facing financial challenges due to the collapse of crypto projects. Although opposed by Grayscale and Digital Currency Group, the sale will allow Genesis to stabilize its position. Additionally, Genesis has settled with the SEC and the New York Attorney General over compliance issues. These developments will enable Genesis to navigate bankruptcy proceedings and work towards a more stable financial future.
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