Genesis Sells Grayscale Bitcoin Trust Shares to Acquire Bitcoin for Creditor Repayments

Genesis, a bankrupt crypto lending company, sold 36 million Grayscale Bitcoin Trust (GBTC) shares for $2.1 billion to acquire Bitcoin (BTC) as part of its debt repayment strategy. The transaction occurred on April 2, with the sale proceeds funding the purchase of 32,041 Bitcoin at a price of $65,685 per coin. Coinbase has expressed confidence that the sell-off will have minimal impact on the crypto market, as the funds are expected to remain within the ecosystem.

Genesis Disposes of Grayscale Bitcoin Trust Shares to Acquire Bitcoin for Creditor Repayments

Bankrupt crypto lending platform Genesis has reportedly sold approximately 36 million shares of Grayscale Bitcoin Trust (GBTC) in order to purchase Bitcoin (BTC) as part of its ongoing efforts to settle its debts with creditors.

According to a recent Bloomberg report, Genesis liquidated the GBTC shares on April 2, at an approximate value of $58.50 per share. The share price has experienced a significant increase of roughly 50% since Genesis initially requested permission from the U.S. bankruptcy court to sell the shares on February 2, when they were trading at approximately $38.50.

The total proceeds from the sale amounted to $2.1 billion, which was subsequently used to purchase 32,041 Bitcoin on April 2, at a price of $65,685 per BTC. Genesis intends to utilize the acquired Bitcoin to continue its repayment efforts towards its creditors.

At the time of publication, the market value of the 32,041 Bitcoin stands at approximately $2.18 billion.

Industry experts, including cryptocurrency exchange Coinbase, have downplayed concerns about the potential impact of Genesis's GBTC sale on the broader crypto market. Coinbase has expressed its belief that the majority of the funds obtained from the sale will likely remain within the crypto ecosystem, resulting in a neutral overall effect.

Under the terms of its bankruptcy plan, Genesis has the option to either convert the GBTC shares into underlying Bitcoin assets on behalf of creditors or to sell the shares outright and distribute the proceeds in cash.

This development comes amidst ongoing controversy surrounding Genesis and its parent company, Digital Currency Group (DCG). In February, DCG claimed that Genesis's proposed repayment plan would result in creditors receiving "hundreds of millions of dollars more than the full amount of their petition date claims."

In January 2023, Genesis filed for Chapter 11 bankruptcy in the Southern District of New York. The company's financial distress has raised concerns about the stability of the crypto lending industry and the potential for contagion to spread throughout the broader crypto ecosystem.