Genesis Global Capital, a cryptocurrency lending firm currently in bankruptcy proceedings, has petitioned the U.S. Bankruptcy Court for authorization to liquidate its holdings in various Grayscale Trusts, including Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE), and Grayscale Ethereum Classic Trust (ETCG), amounting to approximately $1.6 billion.
In a recent submission to the court, Genesis underscored the pressing need for approval to sell off the trust assets swiftly, citing the potential impact of price fluctuations in the underlying assets, namely Bitcoin, ether, and Ethereum Classic. The primary objective behind the proposed liquidation is to maximize the funds available for distribution among creditors, according to Genesis.
GBTC constitutes the largest portion of Genesis' trust portfolio, representing about 87% and valued at $1.38 billion. ETHE and ETCG account for approximately 10% and 3% of the total holdings, respectively, amounting to around $169 million and $38 million. As of September 2023, GBTC held approximately 3.2% of the total Bitcoin in circulation, while ETHE and ETCG held significant portions of circulating Ethereum and Ethereum Classic, respectively.
Genesis highlighted GBTC's recent conversion to a spot Bitcoin exchange-traded fund (ETF) following approval from the U.S. Securities and Exchange Commission (SEC) on January 10, enabling the redemption of shares for cash through its redemption program. However, it pointed out that ETHE lacks a redemption plan, necessitating written consent from the sponsor for the sale or disposal of shares. Genesis seeks a waiver of this requirement.
Despite the recent sale of GBTC shares by bankrupt cryptocurrency exchange FTX, Genesis has affirmed its commitment to maximizing the proceeds from the sale of crypto assets. The company emphasized collaboration with Gemini, the sponsor of the Grayscale Trusts, to exert reasonable efforts in good faith to maximize the market price of the trust assets and optimize the proceeds derived from sales or redemptions.
