35 Million Genesis GBTC Shares Approved By Court To Sell

Key Points:

• Bankrupt Genesis Global gets court nod to redeem $1.3B+ in Grayscale Bitcoin Trust shares for creditor compensation.
• Despite objections, court allows gradual conversion to Bitcoin or cash, emphasizing Genesis’ independence.
• Strategic sell-offs planned to prevent price drops; the compaby also seeks to claim additional pledged Genesis GBTC shares.

According to Bloomberg, Genesis Global has been granted permission by a bankruptcy court to commence redeeming approximately 35 million Grayscale Bitcoin Trust (GBTC) shares, valued at over $1.3 billion. This move comes as the bankrupt crypto lender prepares to compensate clients who lent it digital assets.

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Genesis GBTC Shares Redemption Approved by Court

Judge Sean Lane approved the company’s request to convert the Genesis GBTC shares into either Bitcoin or cash, with the process slated to occur gradually with the assistance of a broker. Additionally, Genesis aims to sell more than 11 million shares in two Grayscale Ethereum Trusts, totaling over $200 million.

According to Genesis’ lawyer, Sean O’Neal, the current value of the Genesis GBTC shares stands at roughly $1.6 billion.

Genesis Asserts Independence Amid Parent Company Objections

However, Genesis’ parent company, Digital Currency Group, attempted to postpone the redemptions until after the bankruptcy court decides on its subsidiary’s debt repayment plan later this month. Although not opposed to selling the Genesis GBTC shares, Digital Currency Group expressed concerns about the potential premature nature of the redemptions if the plan is rejected.

Despite objections from the parent company, Judge Lane asserted Genesis’ independence in Chapter 11 proceedings, allowing the company to determine the asset sale strategy. He emphasized that redemptions would be conducted strategically with a broker to prevent rapid sell-offs, a move widely supported by Genesis creditors.

Furthermore, Genesis seeks to claim an additional 30 million GBTC shares pledged to Gemini but never transferred.

The court is set to address the motion on February 8, following a separate filing seeking to expedite deadlines. This development follows a significant sell-off of GBTC shares by the FTX estate in January, leading to substantial outflows for the Bitcoin ETFs as a whole.