Cryptocurrency exchange Gemini Trust Co announced that crypto lender Genesis has filed a motion in U.S. Bankruptcy Court to authorize the sale of trust assets. The motion also seeks approval to monetize Genesis's interests in two Grayscale Ethereum trusts, which provide investors with exposure to cryptocurrency.
Key Details of the Motion
- Asset Monetization: Genesis aims to sell 30,905,782 shares of Grayscale Bitcoin Trust (GBTC), which served as initial collateral.
- Expedited Hearing: Genesis has requested a hearing on February 8 to fast-track the approval process.
- Liquidation Plan: The proceeds from the asset sales will be used to repay customers in cash or cryptocurrency, depending on their original deposits.
Background on Genesis and Gemini
The motion follows Genesis's recent settlement with the U.S. Securities and Exchange Commission (SEC) regarding its defunct Gemini Earn lending program. The program was suspended during the November 2023 crypto market crash, leading to disputes between Genesis, Gemini, and Genesis's parent company, Digital Currency Group (DCG).
Implications for Investors
- Repayment Process: Customers who participated in the Earn program will receive compensation based on the type of currency they deposited.
- Market Impact: The sale of GBTC shares could influence Bitcoin's market dynamics, given the trust's significant holdings.
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Frequently Asked Questions (FAQ)
1. What is Genesis seeking to sell?
Genesis aims to sell its holdings in Grayscale Bitcoin Trust (GBTC) and two Grayscale Ethereum trusts to repay creditors.
2. How will customers be repaid?
Customers will receive cash or cryptocurrency, depending on their original deposits in the Gemini Earn program.
3. When is the hearing for the motion?
Genesis has requested an expedited hearing on February 8.
4. What led to Genesis's bankruptcy?
Genesis faced liquidity issues during the 2023 crypto market crash, leading to the suspension of its Earn program.
5. How does this affect Gemini?
Gemini is involved in ongoing litigation with Genesis and DCG over the Earn program's collapse.
6. Will the asset sale impact Bitcoin prices?
The sale of GBTC shares could affect Bitcoin's market due to the trust's large holdings.
Conclusion
Genesis's motion marks a critical step in its bankruptcy proceedings, aiming to resolve creditor claims and stabilize its financial position. The outcome of the February 8 hearing will determine the next phase of asset monetization and customer repayments.