Genesis files a motion to sell $1,6 billion worth of Grayscale crypto trust shares

In question is exchange-traded products based on bitcoin, Ethereum, and Ethereum Classic

06.02.2024 - 07:36

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2 min

What’s new? Bankrupt crypto broker Genesis has requested court approval to sell bitcoin, Ethereum, and Ethereum Classic stored in exchange-traded products from investment firm Grayscale, totaling more than $1,6 billion. Of that, $1,4 billion is placed in the Grayscale Bitcoin Trust (GBTC), which was converted into a spot exchange-traded fund (ETF) in January. Another $165 million is held in the Grayscale Ethereum Trust, and $38 million in the Grayscale Ethereum Classic Trust. Genesis and Grayscale are part of Barry Silbert’s Digital Currency Group (DCG) conglomerate.

Genesis’ petition

What else is known? If the proposal is approved, bitcoin could once again face selling pressure. In January, bankrupt crypto exchange FTX sold 22 million GBTC shares worth more than $1 billion, coinciding with the asset’s plunge to $39 500.

As for Genesis, it transferred some GBTC shares to crypto exchange Gemini as collateral for the Gemini Earn joint revenue program. The broker wants to sell 31 million shares that were intended for the exchange but were never transferred to its accounts.

Launched in December 2020, Earn allowed Gemini customers to lend their Genesis cryptocurrencies at interest. Since the broker’s bankruptcy last January, more than 100 000 users have been unable to receive their assets and interest totaling more than $1 billion. Gemini is the largest creditor of Genesis.

Genesis owes another more than $3,5 billion to several entities, including market maker Cumberland and New Finance Income Fund, and investment firm VanEck.

Genesis previously entered into a settlement agreement with the US Securities and Exchange Commission (SEC) over its lawsuit alleging violations under the Earn program. The brokerage will pay a $21 million fine after settling debts owed to creditors. Gemini is also a defendant in this lawsuit.

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