Key takeaways:
- The sale of 1.6 billion Bitcoin and Ethereum (ETH) trust shares has been approved by a New York court for cryptocurrency lender Genesis.
- Roughly $1.38 billion is the value of the Bitcoin shares. At current exchange rates, the total value of the Ethereum and ETH classic trust shares is about $207 million.
The sale of 1.6 billion Bitcoin and Ethereum (ETH) trust shares has been approved by a New York court for cryptocurrency lender Genesis.
The lender filed for bankruptcy in January to use the proceeds from the sales of Bitcoin and Ethereum to settle debts with creditors.
Judge Sean Lane, a US bankruptcy judge, permitted Genesis on Wednesday to profit from the sale of specific Bitcoin and Ethereum components. The entities originating the shares are Grayscale Classic Trust, Grayscale Ethereum Trust, and Grayscale Bitcoin Trust.
Roughly $1.38 billion is the value of the Bitcoin shares. At current exchange rates, the total value of the Ethereum and ETH classic trust shares is about $207 million.
In formal court documents, Genesis informed the judge that the proceeds from these sales had to be used to reimburse clients and keep itself from paying $1.9 million in monthly fees related to its trust arrangements. Notably, the courts have not yet approved Genesis Global’s comprehensive bankruptcy plan.
Additionally, Genesis and its clients came to an early February arrangement for the company to close and for customers to receive their money back in cash or bitcoin. The mode of repayment is contingent upon the manner in which clients fund their Genesis accounts.
This strategy was approved by the SEC and the Attorney General of New York, Letitia James. If Genesis has any money left over after paying back customers, it will also pay the SEC a $21 million penalty. This guarantees that, in the bankruptcy plan, Genesis will not retain any of the sales earnings.
Genesis declared bankruptcy in January 2023 as a result of an SEC lawsuit. Genesis is accused by the SEC of selling illicit securities and of engaging in fraud when it stopped allowing customers to withdraw money in November 2023.
The conversion of Grayscale’s GBTC to a spot Bitcoin Exchange Traded Fund (ETF) for listing and trading on US exchanges and offerings from ten other asset managers was approved by the US Securities and Exchange Commission (SEC) on January 10. Genesis stated that the shares’ cash redemption would be easier with the SEC’s permission.
Genesis and the SEC reached a $21 million settlement on January 31 regarding Genesis’ purported involvement in the marketing and selling of unregistered securities via the Gemini Earn initiative. The company is not affiliated with Genesis Global Trading, the subject of an enforcement action from the New York Department of Financial Services in January.
