Genesis converts 36 million shares of GBTC into Bitcoin

Genesis, a beleaguered cryptocurrency lending firm, has undertaken a significant strategic move by converting approximately 36 million shares of Grayscale Bitcoin Trust (GBTC) into Bitcoin, marking a pivotal step in its efforts to address its outstanding debts and liabilities with creditors. This development, reported by Bloomberg, underscores Genesis’s proactive approach to navigating its financial challenges within the volatile crypto landscape.

The decision to liquidate the GBTC shares, executed on April 2, represents a calculated response to Genesis’s pressing financial obligations. At the time of sale, each GBTC share was valued at around $58.50, showcasing a notable increase of approximately 50% since Genesis initially sought approval from the U.S. bankruptcy court to initiate the sell-off. Beginning the process on February 2, when the shares were valued at $38.50, Genesis successfully generated a substantial sum of $2.1 billion from the sale, facilitating the acquisition of 32,041 bitcoins at an average price of $65,685 per bitcoin on April 2.

These newly acquired bitcoins are earmarked to fulfill Genesis’s commitments to its creditors, signaling a tangible step towards resolution amidst its financial turmoil. The move underscores Genesis’s commitment to addressing its liabilities in a strategic and proactive manner, leveraging the assets at its disposal to meet its financial obligations.

In response to concerns regarding the potential impact of the sizable sell-off on the broader cryptocurrency market, Coinbase, a leading cryptocurrency exchange, sought to reassure stakeholders by emphasizing that the proceeds from the transaction are likely to remain within the crypto ecosystem. Coinbase clarified that Genesis, operating under the purview of bankruptcy proceedings, has the option to convert GBTC shares into Bitcoin assets on behalf of creditors or to sell the shares outright and distribute the cash proceeds, thereby mitigating any potential market disruption.

This strategic maneuver by Genesis comes amidst ongoing legal proceedings and regulatory scrutiny surrounding the company and its parent entity, Gemini. A recent ruling by a federal judge determined that the Securities and Exchange Commission’s (SEC) lawsuit alleging the sale of unregistered securities through the Gemini Earn program will proceed to trial. Despite attempts by Gemini and Genesis to dismiss the lawsuit, the judge deemed the SEC’s allegations credible enough to warrant further legal scrutiny, reflecting the complexities and challenges inherent in navigating the regulatory landscape within the cryptocurrency industry.

Genesis’s conversion of GBTC shares into Bitcoin represents a pivotal development in its ongoing efforts to address its financial obligations and chart a path towards resolution amidst a challenging operating environment.