Bankrupt Firm Genesis Applies for Approval to Sell $1.6 Billion in Trust Assets
Cryptocurrency lending protocol Genesis filed for bankruptcy in 2022 shortly after the demise of FTX, Alameda Research, Three Arrow Capital, and BlockFi. Debtors of the lending protocols recently voted in favor of expediting the approval for sales of trust assets.
Genesis has submitted documents at the court to sell $1.6 billion in reserves. The debtors have asked the authorities to accelerate the process of granting approval to avoid decreasing profits on account of potential price changes.
Genesis Global officials filed the petition for trust asset sales approval at the US bankruptcy court. The petition requires authorities to grant approval for liquidating a sizeable portion of Grayscale Bitcoin Trust, Grayscale Ethereum Trust, and Grayscale’s Ethereum Classic Trust. At the current market evaluation, the prices are valued at around $1.6 billion as of 4th February 2024.
Genesis Debtors Ask Court to Expedite the Sales Approval Petition
As per official filings, GBTC shares account for 87% of the total portfolio of Genesis. This portion is distributed among three trusts that have an aggregate value of $1.38 billion. It is important to note that ETHE the shares of Grayscale’s Ethereum Trust comprise 10% of its entire reserve holdings. This portion of the share is valued at around $169 million.
Meanwhile, ETHCG accounts for 3% of Genesis’s portfolio with an evaluation of $38 million. GBTC reserve records indicate that the trust held around 3.2% of the total Bitcoin reserve.
Grayscale’s Ethereum Trust
In December 2022, Grayscale’s Ethereum trust accumulated around 2.5% of the total circulatory supply of Ethereum. In the same manner, ETCG consisted of 8.5% of the overall Ethereum Classic tokens.
Genesis officials have noted that SEC approval of converting GBTC shares into a spot Bitcoin ETF allows investors to redeem their GBTC shares in exchange for cash. On the other hand, the firm noted that ETHE did not incorporate a redemption plan. The investors who wish to sell their shares need to get written approval from a sponsor.
Genesis Seeks Approval to Sell ETHE Shares
Since the approval of Bitcoin spot ETF on 10th January, a considerable amount of investors have proceeded to sell their GBTC shares. However, Genesis has asked the court to waive the requirement of written approval for selling or deposing ETHE shares in its recent filing.
In the same manner, bankrupt cryptocurrency exchange FTX liquidated around 22 million in GBTC shares that were valued at around $1 billion. With this step, the exchange was deposed of its entire GBTC stash.
Genesis has informed the courts that it intends to maximize earnings from sales of trust holdings. The firm noted that debtors and Gemini exchange are going to cooperate with each other in a bid to maximize the price of underlying trust assets or initial GBTC equity.
At the same time, the nominated investors are also to make reasonably best attempts to increase the value of returns generated from the sales of shares redemption.
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