The court allowed the Genesis crypto lender to sell shares of the Grayscale Bitcoin Trust fund for $ 1.3 billion
The bankruptcy Court of the Southern District of New York granted the petition of the bankrupt crypto lender Genesis Capital, who asked to be allowed to sell shares of the Grayscale Bitcoin Trust (GBTC) fund for $1.3 billion in order to repay debts to creditors.
Gemini cryptocurrency exchange implemented the Gemini Earn income generation program, which allowed investors to systematically lend their Genesis assets under a trilateral agreement. Investors were guaranteed profits at the end of the agreed period, and Genesis capital was provided in the form of loans to large companies.
In accordance with the Genesis agreement with Gemini, about 60 million GBTC shares were pledged to participants of the Gemini Earn program. However, Genesis failed to fulfill its part of the contract, refusing to pay interest to investors. Therefore, the Gemini exchange tried to claim GBTC shares, implied as collateral for Genesis.
In October 2023, Gemini sued its former business partner Genesis. Gemini management claims that GBTC shares will be sufficient to meet the requirements of all investors who participated in the Gemini Earn program and suffered due to the fact that Genesis stopped withdrawing funds in 2022. Gemini demanded from the court that Genesis no longer control GBTC shares and could not use them to repay obligations to any Genesis creditors involved in bankruptcy proceedings. In turn, Genesis appealed to the court with a request to allow the sale of trust assets worth $ 1.6 billion.
