Bankrupt Crypto Lender Genesis Raises $2.1 Billion from GBTC Share Sale

Bankrupt cryptocurrency lending firm Genesis has taken a significant step towards settling its debts with creditors by selling 36 million shares of the Grayscale Bitcoin Trust (GBTC) and using the proceeds to acquire additional Bitcoin (BTC). The sale, which took place on April 2, saw each GBTC share valued at approximately $58.50, resulting in a total sale amount of $2.1 billion.

TLDR

Bankrupt crypto lending firm Genesis has sold 36 million shares of the Grayscale Bitcoin Trust (GBTC) to acquire additional Bitcoin (BTC) and settle its debts with creditors.
The sale took place on April 2, with each share valued at around $58.50, resulting in a total amount of $2.1 billion.
With the funds raised from the sale, Genesis purchased 32,041 Bitcoin at a price of $65,685 per BTC, currently worth around $2.18 billion.
This move is part of Genesis’ efforts to repay its creditors, following the company’s filing for Chapter 11 bankruptcy in January 2023.
Coinbase stated that the sell-off is not expected to have a significant impact on the broader crypto market, as the funds are likely to remain within the crypto ecosystem.

Genesis initially sought permission from a US bankruptcy court to sell these GBTC shares on February 2, when the shares were priced at $38.50. Since then, the share price has climbed by roughly 50%, allowing Genesis to maximize its returns from the sale. The US judge overruled a filing by Digital Currency Group (DCG), the parent company of Genesis and Grayscale, to consult on the sales.

Using the funds raised from the GBTC share sale, Genesis purchased 32,041 Bitcoin at a price of $65,685 per BTC. At the time of publication, the acquired Bitcoin is worth approximately $2.18 billion. This move is part of Genesis’ ongoing efforts to repay its creditors, following the company’s filing for Chapter 11 bankruptcy in January 2023.

Under the bankruptcy plan, Genesis had the option to either convert the GBTC shares into Bitcoin on behalf of the creditors or sell the shares outright and distribute the cash. The rules allowed for either approach, giving Genesis the flexibility to choose the most beneficial course of action for its creditors.

Despite the significant sell-off of GBTC shares, cryptocurrency exchange Coinbase has stated that the move is not expected to have a major impact on the broader crypto market. In a recent statement, Coinbase explained, “Our view is that much of these funds will likely remain within the crypto ecosystem, contributing to a neutral overall effect in the market.”

This assurance from Coinbase has helped to alleviate concerns about potential market disruptions resulting from Genesis’ actions. As the bankrupt lending firm continues to navigate its way through the bankruptcy process, the successful sale of GBTC shares and subsequent acquisition of Bitcoin represent a positive step towards meeting its obligations to creditors.

The case of Genesis highlights the ongoing challenges faced by crypto lending firms in the face of market volatility and regulatory scrutiny. As the industry continues to mature and adapt to these challenges, it remains to be seen how other firms will navigate similar situations in the future.

✨ Limited Time Offer