Sales will be executed gradually under broker guidance to prevent sudden share dumping, which could negatively impact prices.
Genesis Global has been approved by the bankruptcy court to sell around 35 million shares of Grayscale Bitcoin Trust, with an estimated value of $1.3 billion. U.S. Bankruptcy Judge Sean Lane made the decision during a court hearing held in White Plains, New York.
This approval authorizes Genesis to monetize its holdings of Grayscale Bitcoin Trust, Grayscale Ethereum Trust, and Grayscale Ethereum Classic Trust.
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Genesis to Sell its GBTC Shares
In addition to the $1.3 billion in GBTC shares, Genesis intends to sell over 11 million shares in two Grayscale Ethereum Trusts, with a combined value exceeding $200 million, as detailed in a court filing dated February 2.
This will result in a total of approximately $1.6 billion shares in Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE), and Grayscale Ethereum Classic Trust (ETCG) combined.
However, Genesis’s parent company, Digital Currency Group, attempted to delay the proposed sale until after the bankruptcy court decides on the subsidiary’s debt repayment plan, which is scheduled for later this month. DCG expressed concerns that premature Grayscale share sales could depress prices, minimizing potential recoveries for Genesis creditors.
Jeffrey Saferstein, representing DCG, also emphasized the need for careful consideration to avoid the rapid unloading of shares. Additionally, DCG sought the right to seek input on selling Grayscale shares.
Despite these objections, Judge Sean Lane ruled in favor of Genesis, asserting the company’s right to determine the strategic sale of its assets. He emphasized that the sales would be conducted over time with the assistance of a broker to prevent any rapid unloading of shares, which could adversely affect prices.
Lane justified his decision by highlighting the “considerable expertise” of Genesis and its creditors in crypto, suggesting that they are well-equipped to maximize the value of the Grayscale shares.
SEC and NY Attorney General Settlement
Meanwhile, Genesis is moving forward with its liquidation plan, which entails shutting down the company and repaying customers in cash or cryptocurrency, depending on the nature of their deposits.
The company has reached settlements with the U.S. SEC and New York Attorney General Letitia James earlier this month, resolving their objections to its bankruptcy plan.
Under the terms of the settlements, the SEC will be paid a $21 million fine if Genesis has any surplus funds after repaying customers. Furthermore, any funds recovered from the bankruptcy proceedings will be used by the New York Attorney General to assist creditors allegedly defrauded by Genesis.