Cryptocurrency lender Genesis, currently undergoing bankruptcy proceedings, has submitted a motion seeking approval from a U.S. judge to sell assets totaling more than $1.6 billion in bitcoin (BTC), ether (ETH), and ethereum classic (ETC). The majority of these assets, nearly $1.4 billion, were initially held in Grayscale Bitcoin Trust (GBTC), which has since transitioned into a spot exchange-traded fund (ETF).
If the motion is granted, the market may experience a notable increase in selling pressure on bitcoin. A similar scenario occurred in January when bankrupt exchange FTX liquidated over $1 billion in GBTC holdings, coinciding with a drop in bitcoin’s price from $49,000 to $39,000.
Genesis’ asset portfolio includes $165 million in Grayscale Ethereum Trust and $38 million in Grayscale Ethereum Classic Trust, as revealed in the filing. Notably, a portion of GBTC shares was transferred to the Gemini cryptocurrency exchange by Genesis as collateral for the Gemini Earn program. Additionally, Genesis is seeking the release of 31 million GBTC shares pledged to Gemini but not yet transferred.
Genesis and Grayscale were integral components of Digital Currency Group’s crypto empire, which faced challenges and controversies amid the collapse of prominent funds and exchanges in 2022. This series of events led to Genesis declaring bankruptcy last year.
Gemini emerges as the primary creditor for Genesis, estimating that over 100,000 of its users are affected by the bankruptcy, with outstanding claims ranging from $1 billion to $10 billion. Genesis owes more than $3.5 billion to its top 50 creditors, including entities such as trading giant Cumberland, Mirana, MoonAlpha Finance, and VanEck’s New Finance Income Fund. The bankruptcy proceedings underscore the challenges faced by key players in the cryptocurrency industry during a tumultuous period in the market.
