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Genesis, a cryptocurrency lending institution undergoing bankruptcy proceedings, made a significant Bitcoin purchase in order to be able to repay its customers.
The company purchased a total of 32,041 Bitcoins with the proceeds from the sale of Grayscale Bitcoin Trust (GBTC) shares. This purchase reportedly followed the completion of the sale of approximately 36 million GBTC shares.
According to court documents, the sale of GBTC shares was completed on April 2nd. On February 14th, a New York bankruptcy court had authorized Genesis to sell not only GBTC shares but also Grayscale Ethereum Trust and Grayscale Ethereum Classic Trust shares.
When Genesis filed this application, its GBTC holdings were estimated to be worth approximately $1.4 billion, its Grayscale Ethereum Trust holdings worth $165 million, and its Ethereum Classic Trust holdings worth approximately $38 million.
Genesis filed for Chapter 11 bankruptcy protection in January 2023 following turmoil and liquidity problems in the cryptocurrency market. The company’s bankruptcy process was closely watched by the market, particularly regarding how the claims of individual and institutional clients would be met.
The recently purchased 32,041 Bitcoins are said to be worth over $2.17 billion at current market prices. These assets are planned to be used to repay Genesis’ debts to its customers. Experts say this move is a positive development for creditors and could contribute to a more orderly bankruptcy process.
Genesis’s move is seen as potentially setting a precedent for asset management and customer repayments for bankrupt companies in the crypto sector.
*This is not investment advice.