Genesis Aims to Sell $1.3 Billion Worth of GBTC

A significant development unfolds within the cryptocurrency landscape as Genesis, a bankrupt lender, seeks authorization to divest approximately $1.3 billion worth of Grayscale's Bitcoin ETF GBTC. Scheduled for deliberation on Thursday, Feb. 8, in a court hearing, this motion, filed on a Friday, solicits approval for the sale of GBTC shares, with potential inclusion of shares from Grayscale's Ethereum Trust (ETHE) and Ethereum Classic Trust (ETCG) contingent upon judicial consent.

Genesis's Holdings and Prospective Transactions

Genesis currently commands an extensive portfolio, boasting holdings of over 35 million GBTC shares, 8 million ETHE shares, and close to $3 million worth of ETCG. Calculated based on GBTC's share prices as of Jan. 30, the proposed divestments could potentially yield nearly $1.4 billion in proceeds. 

However, it's worth noting that the value of GBTC shares has exhibited a slight downward trajectory since January, with the closing price dipping from $38.50.

Implications on Market Dynamics

Should the motion garner approval, Genesis's intended sales across the ETF and the two trusts would cumulate to a staggering total of nearly $1.6 billion. 

This strategic maneuver resonates with a recent trend observed in the market, wherein the FTX estate previously offloaded nearly $1 billion in GBTC shares, contributing to significant outflows for the bitcoin ETF and the broader ETF market.

Analyzing Market Trends and Regulatory Landscape

Despite the recent outflows experienced by GBTC, data sourced from CoinShares underscores the resilience of bitcoin ETFs, with inflows surpassing $700 million last week, thereby eclipsing the outflows. 

This dynamic underscores continued investor interest and activity within the ETF realm, notwithstanding challenges faced by specific offerings such as GBTC. 

Navigating Legal Proceedings and Additional Claims

Genesis's motion to liquidate its GBTC shares is poised to be deliberated alongside another filing that seeks to expedite deadlines. In addition to the proposed divestitures, the bankrupt lender aims to assert its claim over 30 million GBTC shares pledged to Gemini but not yet transferred, as outlined in the filing. Furthermore, the motion advocates for Gemini's authorization to monetize the Initial Collateral it holds for the benefit of Earn users.

Settlement with Regulatory Authorities and Its Ramifications

In a notable development, Genesis recently reached a settlement with the Securities and Exchange Commission (SEC), potentially obligating the bankrupt lender to remit $21 million to the regulatory body, subject to creditor repayment. 

This settlement underscores the escalating regulatory scrutiny prevalent within the cryptocurrency ecosystem and its reverberating impact on market participants such as Genesis.

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DISCLAIMER: This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.