In a recent development, the bankruptcy case of Genesis has taken a significant turn. U.S. Bankruptcy Judge Sean Lane has given the green light for Genesis to sell its Grayscale GBTC shares, a move that may introduce fresh sell pressure on Grayscale’s crypto assets.

Genesis Gains Court Approval for Share Liquidation

On the pivotal date of February 14th, a U.S. Bankruptcy Judge sanctioned Genesis, a subsidiary of Digital Currency Group (DCG), to commence the sale of its Grayscale crypto product shares. These assets include the converted Bitcoin ETF GBTC, Ethereum Trust (ETHE), and Ethereum Classic Trust (ETCG).

A Closer Look at the Numbers

The court’s approval paves the way for Genesis to liquidate approximately 35 million GBTC shares, which are currently valued at around $1.6 billion. At the time of the court ruling, each GBTC share was trading at approximately $46. Additionally, Genesis is authorized to sell $182 million worth of ETHE shares and $3 million in ETCG shares.

Sales Strategies and Restrictions

The ruling includes permission for Genesis to collaborate with a broker of its choosing to facilitate these sales, with the option to liquidate for Bitcoin or to convert the assets into cash. Interestingly, the court did not specify a deadline for this liquidation process.

Moreover, Judge Lane has restricted the parent company, DCG, from participating in the consultation process concerning the sales, citing potential biases in favor of its own interests.

Genesis Settles Lawsuits Amidst Financial Struggles

Genesis has been proactive in resolving its legal challenges, having settled multiple lawsuits in the first two months of the year. Following a substantial $700 million loan repayment from DCG, the crypto lender managed to strike a deal with the New York Department of Financial Service, which resulted in an $8 million fine and the surrender of its BitLicense—a critical license for operating within the state.

The company also agreed to a $21 million settlement with the U.S. SEC over a lawsuit involving the Gemini Earn program. However, a significant lawsuit is still outstanding with New York Attorney General Letitia James, who has accused Genesis, along with Gemini, DCG, and their affiliates, of engaging in complex fraud prior to the crypto contagion of 2022.

What This Means for Grayscale and the Crypto Market

This court decision could potentially exert downward pressure on Grayscale’s GBTC as the market anticipates the sale of the shares. The outcome of Genesis’s ongoing legal battles and its approach to settling its debts will be closely watched by investors and market analysts alike, as they could have far-reaching implications for the stability and confidence in the crypto market.