Genesis Global Capital Seeks Court Approval to Sell Trust Assets Worth $1.6 Billion

Genesis Global Capital, amidst ongoing bankruptcy proceedings, has formally requested the U.S. Bankruptcy Court for the Southern District of New York to approve the sale of its trust assets totaling approximately $1.6 billion. The assets primarily consist of Grayscale Bitcoin Trust (GBTC) shares, valued at nearly $1.4 billion, along with $200 million in shares of Grayscale’s Ethereum and Ethereum Classic trusts.

The move to sell GBTC shares is deemed essential by Genesis Global Capital and its debtor-affiliates to optimize estate value and effectively manage their assets. The urgency of the request is apparent, as Genesis seeks an expedited proceeding to align with the court’s scheduled hearing on February 8.

Strategic Liquidation of Assets

Genesis’ decision to liquidate these assets stems from its involvement in the cryptocurrency lending sector, including collateral transferred to Gemini through the Gemini Earn program and assets acquired from the bankruptcy of Three Arrows Capital.

The sale also aims to support efforts to legally reclaim over 31 million additional GBTC shares, valued at approximately $1.2 billion, initially pledged to Gemini pending a court decision on ownership.

Regulatory Settlement and Financial Implications for Genesis Global Capital

Last week, Genesis agreed to pay $21 million to the U.S. Securities and Exchange Commission (SEC) to settle a lawsuit filed by the regulator just a week before the firm filed for bankruptcy protection.

The SEC’s allegations focused on the offering of unregistered securities through the Gemini Earn program. Gemini responded, indicating that the SEC’s claim would be subordinate to various other permitted expenses, implying that the SEC would only receive a distribution from the Genesis estate after other creditors are compensated.