BANKRUPT CRYPTO LENDER GENESIS SEEKS APPROVAL TO SELL $1.6B OF TRUST ASSETS

Last updated: June 19, 2025, 20:52 | Written by: Brock Pierce

The cryptocurrency world is once again facing a moment of potential turbulence as bankrupt crypto lending firm Genesis Global Capital has requested court approval to liquidate a massive $1.6 billion in trust assets.This move, filed with the United States Bankruptcy Court for the Southern District of New York, signals a critical step in Genesis's ongoing efforts to repay its creditors and navigate the complexities of its bankruptcy proceedings.The assets in question are primarily shares held in Grayscale cryptocurrency trusts, including the Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE), and Grayscale Ethereum Classic Trust (ETCG). Bankrupt crypto lender Genesis Global on Wednesday received permission from a U.S. court to sell about $1.6 billion in Grayscale cryptocurrency trust shares as part of its effort toThe filing highlights the company's desire to mitigate risks associated with the volatile nature of cryptocurrency markets, emphasizing the urgency to convert these trust shares into more stable assets.But what does this mean for the broader crypto landscape, particularly for Bitcoin and Ethereum prices?What are the potential implications for investors holding similar assets?And, perhaps most importantly, what led Genesis to this critical juncture?This article delves into the details of Genesis's request, explores the potential market impact, and examines the underlying factors driving this significant event in the crypto industry. Bankrupt crypto lending firm Genesis Global Capital has requested a United States Bankruptcy Court for permission to liquidate shares in the Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE) and Grayscale Ethereum Classic Trust (ETCG), totaling approximately $1.6 billion.In a recent cWe will provide you with a comprehensive overview of the situation, its potential consequences, and what it all means for you.

Genesis's $1.6 Billion Crypto Asset Liquidation Plan

Genesis's request to liquidate $1.6 billion in trust assets marks a pivotal moment in its bankruptcy proceedings.The company's financial woes, stemming from a combination of factors including the collapse of Three Arrows Capital and the overall downturn in the crypto market, have forced it to seek ways to repay its creditors. Bankrupt crypto lending firm Genesis has requested a United States Bankruptcy Court for permission to liquidate assets held in its Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE), and Grayscale Ethereum Classic Trust (ETCG), totaling approximately $1.6 billion.In a recent court filiThe core of this plan revolves around selling off its holdings in three key Grayscale trusts: GBTC, ETHE, and ETCG.Let's break down these components:

Grayscale Bitcoin Trust (GBTC): This trust holds a significant portion of Genesis's assets, with approximately $1.4 billion tied to Bitcoin exposure.The sale of these shares could significantly impact Bitcoin's market price, depending on the execution and market absorption capacity.
Grayscale Ethereum Trust (ETHE): Holding Ether, the native cryptocurrency of the Ethereum network, the ETHE trust represents a smaller but still substantial portion of Genesis's holdings.Liquidating these shares will contribute to paying off debts owed.
Grayscale Ethereum Classic Trust (ETCG): While smaller than the Bitcoin and Ethereum trusts, the sale of ETCG shares is still a necessary component of Genesis's overall liquidation strategy.

The company has emphasized the need for a swift approval to execute the sale, citing concerns about potential price fluctuations in the cryptocurrency market.Any delay could reduce the value of these assets, impacting the ability to repay creditors fully.The court will need to consider these factors when evaluating Genesis's motion.

Understanding the Rationale Behind the Asset Sale

Why is Genesis seeking to sell these assets now? Debtors for the bankrupt crypto lending firm stressed the need for fast approval to sell the shares before any potential price fluctuations.The rationale lies in a combination of bankruptcy proceedings, market volatility concerns, and the need to maximize returns for creditors. Bankrupt crypto lending firm Genesis has requested the United States Bankruptcy Court in the Southern District of New York for permission to liquidate assetHere's a detailed explanation:

Bankruptcy Obligations: As a bankrupt entity, Genesis is legally obligated to liquidate assets and distribute the proceeds to its creditors. Bankrupt crypto lending platform Genesis could soon sell $1.3 billion GBTC shares, with potential impact on the bitcoin price. A U.S. court has given Genesis Global permission to sellThis sale is a key step in fulfilling those obligations.
Mitigating Market Volatility: The cryptocurrency market is known for its unpredictable price swings.Genesis wants to convert volatile crypto assets into more stable, liquid assets to minimize the risk of further losses.
Maximizing Creditor Recovery: By selling the trust shares, Genesis aims to generate the maximum possible value to repay its creditors. Crypto lender Genesis seeks court approval to sell trust assets worth $1.6B, with GBTC shares comprising nearly $1.4B. Getting your audio player ready Genesis Global Capital has formally requested authorization from the U.S. Bankruptcy Court for the Southern District of New York to proceed with an extensive sale of its holdings.The sooner the sale occurs, the less risk there is of market downturns eroding the value of these assets.

Furthermore, Genesis faces competing claims, notably from Gemini, regarding additional shares pledged as collateral.This adds another layer of complexity to the situation and underscores the urgent need for a resolution through the court-approved sale.

Potential Impact on Bitcoin and Ethereum Prices

The potential sale of such a large volume of GBTC and ETHE shares has naturally raised concerns about its impact on the prices of Bitcoin and Ethereum.While predicting the exact market response is impossible, we can analyze the potential contributing factors:

Increased Selling Pressure: The most immediate impact will be increased selling pressure on GBTC, and indirectly on Bitcoin as arbitrage traders react to any discount that may develop between GBTC and the underlying Bitcoin. Genesis Requests Court Approval to Liquidate $1.6 Billion in Crypto Trust Assets. The bankrupt crypto lending firm, Genesis, has filed a request with the United States Bankruptcy Court for permission to sell off assets held in its Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE), and Grayscale Ethereum Classic Trust (ETCG).A similar effect would occur with ETHE and Ethereum.
Market Sentiment: The sale could negatively affect market sentiment, particularly if investors interpret it as a sign of further distress in the crypto lending space.Fear and uncertainty can drive down prices.
Absorption Capacity: The market's ability to absorb the selling pressure will be crucial. Bankrupt crypto lender Genesis is seeking the court s approval to sell $1.6 billion in trust assets, of which nearly $1.4 billion are shares in GBTC. Genesis is seeking the court's authorization to sell almost $1.4 billion worth of GBTC shares.If there are enough buyers to offset the selling, the price impact might be minimal. Bankrupt crypto lending firm Genesis has requested the United States Bankruptcy Court in the Southern District of New York for permission to liquidate assets held in its Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE), and Grayscale Ethereum Classic Trust (ETCG), totaling approximatHowever, a lack of buyers could lead to a more significant price drop.
Coinbase's Perspective: Interestingly, cryptocurrency exchange Coinbase believes that the sale won't significantly disrupt the crypto market.This suggests they anticipate sufficient demand to absorb the selling pressure.

It's important to remember that the crypto market is influenced by numerous factors, and the Genesis sale is just one piece of the puzzle. Bankrupt crypto lender Genesis seeks approval to sell $1.6B of trust assets crypto Debtors of the bankrupt crypto lending firm stressed the need for fast approval to sell the shares before any potential price fluctuations.Other factors, such as macroeconomic conditions, regulatory developments, and overall investor sentiment, will also play a role in determining price movements.

A Deeper Dive into GBTC and its Influence

The Grayscale Bitcoin Trust (GBTC) plays a unique role in the cryptocurrency ecosystem. Cryptocurrency exchange Coinbase believes that the approval for bankrupt crypto lending firm Genesis to sell its Grayscale Bitcoin Trust (GBTC) shares won t disrupt the crypto market.It provides institutional investors with a way to gain exposure to Bitcoin without directly holding the underlying cryptocurrency.However, GBTC operates as a closed-end fund, meaning that it doesn't always trade at its net asset value (NAV). Genesis Global Capital, facing bankruptcy, seeks approval to sell $1.6 billion in trust assets, including significant GBTC shares. The urgent motion and legal claims, notably for additional shares pledged to Gemini, showcase Genesis s proactive financial restructuring.This can sometimes create arbitrage opportunities and influence Bitcoin's price.

When GBTC shares are sold, it can create downward pressure on the premium (or increase the discount) at which GBTC trades relative to Bitcoin. Bankrupt Crypto Lender Genesis Seeks To Sell $1.6B In BTC, ETH, ETC Trusts. In a filing made on Friday, Genesis, the bankrupt crypto lender Genesis requested the judge, seeking approval to start offloading more than $1.6 billion held mainly in BTC, ETH, ETC under Grayscale s trust products.Arbitrage traders may then sell Bitcoin to capitalize on this difference, further contributing to the downward pressure on Bitcoin's price.This dynamic makes the potential sale of Genesis's GBTC holdings a significant concern for Bitcoin investors.

Legal Battles and the Road to Resolution

The journey toward liquidating these assets is not without legal hurdles. Bankrupt crypto lender Genesis seeks US court approval to sell $1.6 billion in Bitcoin, Ethereum, and Ethereum Classic. Genesis' assets are held in Grayscale Trust products; the proposed sale could significantly impact the crypto market.Genesis needs the Bankruptcy Court's approval to proceed with the sale. Bankrupt crypto lending firm Genesis has requested a United States Bankruptcy Court for permission to liquidate shares in the Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE), and Grayscale Ethereum Classic Trust (ETCG), totaling approximately $1.6 billion.In a recent court filing, GThe court will consider several factors, including:

The best interests of creditors: The court must ensure that the sale maximizes the value returned to Genesis's creditors.
Fairness and transparency: The sale process must be fair and transparent to all stakeholders.
Potential market impact: The court will consider the potential impact of the sale on the cryptocurrency market.

Furthermore, the dispute with Gemini over pledged shares adds another layer of complexity. Bankrupt Crypto Lender Genesis Global Seeks Approval to Sell $1.6B of Trust AssetsThe court will need to resolve this dispute before the sale can proceed. Bankrupt crypto lender Genesis filed a motion Friday asking a U.S. judge to approve the sale of over $1.6 billion in bitcoin BTC $96,954.53, ether ETH $1,844.21 and ethereum classic ETCThis complex legal landscape underscores the challenges involved in navigating bankruptcy proceedings in the crypto industry.

Understanding Genesis's Bankruptcy and its Origins

To fully grasp the significance of this asset sale, it's crucial to understand the circumstances that led to Genesis's bankruptcy. Bankrupt cryptocurrency lender Genesis recently filed a motion with the U.S. Bankruptcy Court in the Southern District of New York seeking approval to sell over $1.6B in trust assets.The company, once a prominent player in the crypto lending space, faced a perfect storm of challenges that ultimately led to its downfall.

Three Arrows Capital Collapse: Genesis had significant exposure to Three Arrows Capital (3AC), a crypto hedge fund that collapsed in 2022. Bankrupt crypto lender Genesis filed a motion Friday asking a U.S. judge to approve the sale of over $1.6 billion in bitcoin {{BTC}}, ether {{ETH}} and ethereum classic {{ETC}} held in GrayscaleThis exposure resulted in substantial losses for Genesis.
Market Downturn: The overall downturn in the cryptocurrency market in 2022 further exacerbated Genesis's financial woes.Declining asset values reduced the company's collateral and profitability.
Contagion Effect: The collapse of 3AC triggered a contagion effect in the crypto industry, leading to further instability and liquidity problems for Genesis.

These factors combined to create a liquidity crisis for Genesis, ultimately forcing the company to file for bankruptcy protection.The asset sale is a direct consequence of this financial distress and a necessary step toward restructuring the business and repaying creditors.

What Does This Mean for Crypto Investors?

The Genesis situation serves as a stark reminder of the risks associated with the cryptocurrency market. Related: Bankrupt crypto lender Genesis seeks approval to sell $1.6B of trust assets Schatt and Podulka appeared in court for the first time on May 2 and must return to enter a plea on May 8.Here are some key takeaways for crypto investors:

Diversification is Key: Don't put all your eggs in one basket.Diversify your crypto holdings to mitigate the risk of losses from any single asset or company.
Due Diligence is Essential: Research thoroughly before investing in any cryptocurrency or crypto-related company.Understand the risks involved and assess your risk tolerance.
Stay Informed: Keep up-to-date with the latest news and developments in the crypto industry.This will help you make informed investment decisions.
Be Prepared for Volatility: The crypto market is inherently volatile.Be prepared for price swings and avoid making impulsive decisions based on fear or greed.
Understand Counterparty Risk: Be aware of the risks associated with lending or staking your crypto assets.Choose reputable platforms with strong security measures.

Expert Opinions on the Matter

Several experts have weighed in on the Genesis situation and its potential impact on the crypto market.Their insights offer valuable perspectives on the matter:

Analysts are divided: Some analysts predict a significant price drop for Bitcoin and Ethereum, while others believe that the market will be able to absorb the selling pressure.
Concerns about contagion: Some experts worry that the Genesis situation could trigger further contagion in the crypto industry, leading to more bankruptcies and market instability.
Opportunity for consolidation: Other experts believe that the Genesis situation could ultimately lead to a healthier and more sustainable crypto market, as weaker players are weeded out and stronger players consolidate their positions.

These varying opinions highlight the uncertainty surrounding the Genesis situation and the challenges of predicting its long-term impact.

Potential Outcomes and Scenarios

Several potential outcomes could unfold as Genesis seeks approval to sell its trust assets.Let's explore some possible scenarios:

Scenario 1: Smooth Sale and Limited Market Impact: The court approves the sale, and the market absorbs the selling pressure without a significant price drop.This scenario would be the most favorable for both Genesis and the crypto market.
Scenario 2: Price Drop and Market Volatility: The sale triggers a significant price drop for Bitcoin and Ethereum, leading to increased market volatility and potentially impacting other crypto assets.
Scenario 3: Legal Challenges and Delays: Legal challenges and disputes delay the sale, creating uncertainty and potentially reducing the value of the assets.
Scenario 4: Negotiated Settlement with Creditors: Genesis reaches a negotiated settlement with its creditors, potentially reducing the amount of assets that need to be sold.

The actual outcome will likely depend on a combination of factors, including the court's decision, market conditions, and the outcome of negotiations between Genesis and its creditors.

The Future of Crypto Lending: Lessons Learned

The Genesis bankruptcy has raised serious questions about the future of crypto lending. According to a court filing, the debtors have requested the authority to sell and liquidate the trust assets in a bid to reduce associated volatility risks.The industry needs to learn from the mistakes that led to this crisis and implement stronger risk management practices.

Improved Risk Management: Crypto lending firms need to implement more robust risk management practices, including stress testing, collateralization requirements, and diversification of loan portfolios.
Increased Transparency: Greater transparency is needed in the crypto lending industry.Firms should disclose more information about their lending practices, risk exposures, and financial performance.
Stronger Regulation: Regulators need to provide clearer guidance and oversight of the crypto lending industry to protect investors and prevent future crises.

By addressing these issues, the crypto lending industry can rebuild trust and create a more sustainable and resilient ecosystem.

Conclusion: Key Takeaways and Moving Forward

The situation surrounding bankrupt crypto lender Genesis and its attempt to sell $1.6 billion in trust assets is a complex one with far-reaching implications. Bankrupt crypto lender Genesis has sought approval to liquidate approximately $1.6 billion of trust assets. Including the Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE), and Grayscale Ethereum Classic Trust (ETCG). These assets will be sold to pay off the company s creditors.The outcome of the court's decision and the subsequent market reaction will undoubtedly shape the future of the cryptocurrency landscape.Key takeaways include: The primary reason behind the asset liquidation request is to fulfill bankruptcy obligations and repay creditors. Learn about the latest developments as bankrupt crypto lender Genesis seeks approval to sell $1.6 billion of trust assets. Stay informed with our comprehensiPotential increased selling pressure on Bitcoin and Ethereum which is caused by the Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE).Investors should prioritize diversification, conduct thorough due diligence, and stay informed about market developments and risk. Debtors of the bankrupt crypto lending firm stressed the need for fast approval to sell the shares before any potential price fluctuations. Bankrupt crypto lending firm Genesis Global Capital has requested a United States Bankruptcy Court for permission to liquidate shares in the Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE) and Grayscale Ethereum ClassicThe Genesis situation serves as a crucial lesson for the crypto lending industry to improve risk management and enhance transparency. Bankrupt crypto lending firm Genesis Global Capital has requested a United States Bankruptcy Court for permission to liquidate shares in the Grayscale Bitcoin Trust (GBTC), Grayscale EthereumAs Genesis navigates this challenging period, it's crucial for investors to remain vigilant, stay informed, and manage their risk accordingly.The coming weeks and months will be critical in determining the long-term impact of this event on the crypto market.