Reports reveal that Genesis, a beleaguered crypto lending firm, has made a substantial investment in Bitcoin, purchasing $2.1 billion worth of the cryptocurrency. This move comes after the company sold approximately 36 million shares of the Grayscale Bitcoin Trust (GBTC).
Court documents filed on April 5, as cited by Bloomberg Law, disclose that Genesis utilized the proceeds from the sale of 36 million GBTC shares to acquire 32,041 Bitcoins. The firm intends to utilize these assets to settle debts owed to creditors.
The decision to sell the GBTC shares was authorized by the New York bankruptcy court on Feb. 14, alongside shares from Grayscale Ethereum (ETH) trusts. Initially valued at nearly $1.4 billion, the GBTC shares sold by Genesis have now translated into a considerably larger sum, with the recent surge in Bitcoin prices pushing the value to around $2.2 billion.
Genesis plans to distribute these acquired Bitcoins to its Gemini Earn creditors as part of its repayment strategy. However, Digital Currency Group (DCG), Genesis’s parent company, has raised concerns about the proposed repayment plan, arguing that it may result in overpayment to lenders.
The response from the crypto community has been mixed, with some expressing concerns about the potential impact on GBTC and the broader crypto industry. Nevertheless, cryptocurrency exchange Coinbase has reassured that the sell-off is unlikely to cause major market disruptions.
Genesis’s financial woes stem from the aftermath of the FTX bankruptcy in late 2022, which disrupted its lending operations and prompted significant repayments of locked deposits. In response, Genesis has explored various options, including hiring investment bank Moelis & Co. and announcing a substantial reduction in its workforce.
The bankruptcy filing has raised questions about the stability of Grayscale Bitcoin Trust, with market observers wary of a potential liquidation of over 600,000 Bitcoins linked to the Genesis bankruptcy.
Despite these challenges, Genesis recently reached a settlement with New York Attorney General Letitia James over allegations related to its Earn program. The settlement aims to return assets to former Earn customers and other Genesis creditors, pending approval by a bankruptcy judge.
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