Genesis Global Capital Ramps Up Debt Settlement Efforts After Bankruptcy
Embattled crypto lender Genesis Global Capital has continued to ramp up efforts to pay up creditors after filing for bankruptcy protection in January 2023. As part of these efforts, Genesis has now reportedly sold off the entirety of its Grayscale GBTC holdings to acquire a substantial amount of Bitcoin in order to implement its repayment strategy.
Genesis Converts GBTC Shares To Bitcoin For Debt Settlement
According to a Friday report by Bloomberg Law, Genesis finalized the sale of its 36 million GBTC shares. The company’s lawyers disclosed this in a court filing on April 2. Initially receiving legal approval to liquidate its GBTC holdings on February 2, each unit share was valued at $38.50. However, at the time of sale on April 2, the current price of GBTC surged to $58.50, resulting in a total sale price of $2.1 billion.
- Bloomberg’s report revealed that Genesis used the proceeds to purchase 32,041 Bitcoin at a market price of $65,685.
- The acquired Bitcoin will be distributed to creditors, particularly those previously enrolled in the Gemini Earn program, as part of Genesis’s repayment plan.
Bankruptcy Repayment Plan and Opposition
These recent actions are in line with Genesis’s bankruptcy plan, allowing the conversion of GBTC shares to Bitcoin or direct cash for debt settlement. The crypto lender currently owes $3.5 billion to creditors and will commence repayment upon court approval. However, Genesis faces opposition from its parent company, Digital Currency Group (DCG), over the proposed repayment plan.
- DCG contends that the plan aims to settle creditors’ claims at amounts higher than their entitlement, benefiting senior creditors while leaving equity holders and stakeholders in unfavorable positions.
- Founded in 2013, Genesis is one of several prominent crypto firms to file for bankruptcy, with its insolvency linked to the collapse of the defunct crypto exchange FTX.
Bitcoin Price Movement
In other developments, Bitcoin saw a 2.55% gain in the last day, reaching $69,339. This uptick is encouraging to investors following the token’s recent negative performance. Bitcoin remains largely bullish on higher timeframes, with anticipation growing ahead of the upcoming halving event on April 19. The event, the fourth in Bitcoin’s history, is expected to reduce the mining reward from 6.25 BTC to 3.125 BTC.
Hot Take: Genesis’s Repayment Strategy Faces Criticism
Genesis Global Capital’s actions to settle debts through the conversion of assets have drawn attention in the crypto community. While the sale of GBTC shares to acquire Bitcoin may expedite the repayment process for creditors, opposition from Digital Currency Group raises concerns about the fairness of the plan.
As the crypto space continues to evolve, the outcome of Genesis’s debt settlement efforts will be closely watched by industry participants and stakeholders to assess the implications for future bankruptcy cases in the sector. It remains to be seen how the conflict between Genesis and DCG will impact the final resolution of creditor claims and the overall stability of the crypto lending market.
By
By