Genesis Global Capital Requests Permission to Liquidate $1.6 Billion of Trust Assets

Table of Contents

• Genesis Settles SEC’s Lawsuit Over ‘Earn’ Program
• Genesis Forced to Cough Up

The bankrupt crypto lending firm Genesis Global Capital is seeking permission from a US Bankruptcy court to liquidate its shares in the Grayscale Ethereum Trust (ETHE), Grayscale Bitcoin Trust (GBTC), and Grayscale Ethereum Classic Trust (ETCG). The combined value of the shares is estimated to be worth $1.6 billion. 

According to crypto exchange Gemini Trust Co, crypto lender Genesis filed a motion in a US Bankruptcy Court for authorization to sell trust assets worth $1.6 billion. 

Genesis Settles SEC’s Lawsuit Over ‘Earn’ Program

In a recent court filing, Genesis Global Capital requested permission from a US Bankruptcy Court to liquidate shares in Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE), and Grayscale Ethereum Classic Trust (ETCG). The assets are estimated to be worth around $1.6 billion. Genesis raised the seriousness of obtaining urgent approval given the potential fluctuations of the prices of the underlying assets in its shares. The underlying assets include Bitcoin, Ether, and Ethereum Classic. Genesis explained the urgency is to ensure it maximizes the funds available to creditors for distribution. 

The filing reads:

“The Debtors believe it would be beneficial to have the authority to sell and liquidate the Trust Assets to reduce any risk that fluctuations in price might have on the Debtors’ estates and to facilitate distributions to creditors.”

Genesis recently settled with the US Securities and Exchange Commission (SEC), in which it was accused of breaking securities rules through its Gemini Earn program. Gemini Earn was an interest-bearing program Genesis offered in partnership with Gemini Trust Co.

According to Bloomberg, Genesis, a Barry Sibert’s Digital Currency Group (DCG) subsidiary, agreed to pay the SEC a $21 million civil penalty to end the lawsuit. The settlement explains Genesis will only have to pay the penalty if the company can fully repay its customers and other creditors owed in its Chapter 11 bankruptcy proceedings.

Genesis Forced to Cough Up

Prior to its settlement with the SEC, Genesis agreed to pay a $8 million penalty to New York regulators and surrender its New York Department of Financial Services (NYDFS) license to operate after an investigation found significant compliance failures on the firm’s part. According to the NYDFS, Genesis failed to comply with its AML and cybersecurity programs. The loss of its NYDFS license also causes the firm to cease its New York operations. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.