Genesis Buoys Repayment Plan with $2.1 Billion Bitcoin Buy, Offloads GBTC Shares

Troubled crypto lender Genesis has reportedly purchased $2.1 billion worth of Bitcoin (BTC) after selling off 36 million shares of Grayscale Bitcoin Trust (GBTC). The bankruptcy court had authorized the sale on February 14th, with the intention of using the proceeds to repay creditors. The value of the purchased BTC has increased significantly due to the recent surge in Bitcoin prices, and Genesis plans to distribute the coins to its Gemini Earn creditors as part of its repayment strategy.

Genesis Infuses $2.1 Billion of Bitcoin into Repayment Plan Amidst GBTC Sell-Off

New York, NY - April 6, 2024 In a strategic move to bolster its repayment efforts, bankrupt crypto lending firm Genesis has reportedly purchased $2.1 billion worth of Bitcoin (BTC) after offloading approximately 36 million shares of the Grayscale Bitcoin Trust (GBTC).

According to court documents filed on April 5 and cited by Bloomberg Law, Genesis liquidated 36 million GBTC shares, using the proceeds to acquire 32,041 Bitcoins. This move is part of the firm's plan to repay creditors who have been affected by its financial struggles.

The decision to sell GBTC shares was authorized by the New York bankruptcy court on February 14, alongside the sale of shares from Grayscale Ethereum (ETH) trusts. Genesis initially sought permission to liquidate these assets when the value of GBTC shares stood at approximately $1.4 billion.

However, the recent surge in Bitcoin prices has significantly increased the value of the assets acquired by Genesis. At the current price of around $68,000 per Bitcoin, the purchased coins alone are now worth close to $2.2 billion.

This financial infusion is part of Genesis's strategy to distribute assets to its Gemini Earn creditors. The firm's parent company, Digital Currency Group (DCG), has raised concerns that the proposed repayment plan would result in overpaying lenders.

The crypto community's response to Genesis's move has been mixed. While cryptocurrency exchange Coinbase has expressed confidence that the sell-off will not cause major market disruptions, there are lingering concerns about its potential impact on GBTC and the broader crypto industry.

Genesis's financial woes stem from the fallout of the FTX bankruptcy in late 2022, which disrupted its lending operations and forced it to repay substantial deposits that were locked in its platform. As a result, Genesis explored various options, including hiring investment bank Moelis & Co. and announcing a 30% workforce reduction.

The bankruptcy filing also raised concerns about the stability of Grayscale Bitcoin Trust. Market observers feared a potential liquidation of over 600,000 Bitcoins linked to the Genesis bankruptcy.

Despite these challenges, Genesis recently settled a lawsuit 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, subject to the approval of a bankruptcy judge.

Genesis's latest move to acquire Bitcoin is a significant step in its effort to repay creditors and stabilize its operations. The influx of digital assets provides the firm with valuable capital to address its financial obligations. However, the long-term impact of the sell-off on GBTC and the crypto industry remains to be seen.