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Genesis Global Capital, a subsidiary of the Digital Currency Group (DCG), filed a motion with the United States Bankruptcy Court for the Southern District of New York, seeking approval to liquidate nearly $1.4 billion worth of trust assets.
According to a Feb 2. filing, Genesis holds approximately $1.4 billion in Grayscale Bitcoin Trust (GBTC), along with $165 million in Grayscale Ethereum Trust and $38 million in Grayscale Ethereum Classic Trust shares.
Genesis aims to increase liquidity and facilitate creditor remuneration through the proposed liquidation, which also includes assets tied to Ether (ETH) and Ethereum Classic (ETC).
Genesis has also requested an expedited review of the sale motion, aiming for consideration at the upcoming bankruptcy court hearing on February 8. The urgency is due to the desire to address the situation promptly.
Recently, FTX sold $1 billion worth to GBTC to pay its creditors, contributing to most of the massive GBTC dump, a few weeks ago.
GBTC Shares and Legal Tussles
Genesis originally sent the GBTC shares it acquired during Three Arrows Capital's bankruptcy to Gemini as part of the Gemini Earn program. However, the company is now attempting to reclaim an additional 31.2 million GBTC shares, valued at approximately $1.2 billion, which were promised but not transferred. The ownership of these shares is currently entangled in legal uncertainty.
In response, Gemini remains cautiously optimistic, seeing the motion as a critical step forward, since GBTC has recently been approved as an exchange-traded fund (ETF).
Earn Update: Late yesterday, Genesis filed a Motion Authorizing Sale of Trust Assets. This is an important step forward following the approval of the Grayscale Bitcoin Trust (GBTC) as an exchange-traded product (ETP) on January 10th. As detailed in the motion, Genesis is seeking…
— GeminiTrustCo (@GeminiTrustCo) February 3, 2024
Genesis' Regulatory Settlement and Market Implications
Earlier in the week, Genesis settled a complaint by the U.S. Securities and Exchange Commission (SEC) over the operation of the Gemini Earn program by agreeing to pay a $21 million fine. This fee will be deducted from any remaining funds after the bankruptcy proceedings.
The potential liquidation of such a substantial quantity of GBTC, equivalent to about 3.2% of Bitcoin's total circulating supply, is expected to have notable implications for the broader market.