February 26, 2024

Genesis Files Motion for Asset Sale and Monetization in Bankruptcy Court

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Cryptocurrency lender Genesis has taken a significant step in its ongoing legal matters by filing a motion in U.S. Bankruptcy Court, seeking authorization for the sale of trust assets and the monetization of its interests in two Grayscale Ethereum trusts. Gemini Trust Co, the cryptocurrency exchange, revealed this development on Saturday.

The motion, filed by Genesis on Friday, specifically aims to gain approval for Gemini to monetize the initial collateral, which comprises 30,905,782 shares of Grayscale Bitcoin Trust. Gemini Trust Co issued a statement indicating that Genesis has requested an expedited hearing on the motion, scheduled for February 8.

This move comes shortly after Genesis settled a lawsuit with the U.S. Securities and Exchange Commission (SEC) related to its defunct Gemini Earn lending program. The Gemini Earn program was halted during a cryptocurrency market crash in November 2023, leading to a legal dispute involving Genesis, Gemini, and Genesis’s parent company, Digital Currency Group.

Genesis is currently pursuing a liquidation plan designed to repay customers either in cash or cryptocurrency, depending on the types of currency deposited in the Earn program. The outcome of this liquidation process may have broader implications, especially considering the looming prospect of an Ethereum Exchange Traded Product (ETP).

The cryptocurrency community has been anticipating the introduction of an Ethereum ETP, with a projected timeline of April or May 2024. Industry giants such as BlackRock and Fidelity have shown interest and support for such products through recent SEC filings. However, the ongoing legal disputes involving Genesis, Gemini, and Digital Currency Group could potentially impact the launch and performance of the highly anticipated Ethereum ETP.

Investors and stakeholders, particularly those associated with Grayscale, are closely monitoring these developments, recognizing the potential ripple effects on the broader cryptocurrency market and the nascent but rapidly evolving landscape of cryptocurrency-based financial products. The outcome of the motion and subsequent proceedings will likely shape the narrative around the cryptocurrency lending space and influence the regulatory environment governing such activities.

Digital Assets Desk

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