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 Grayscale’s trust products.
If the motion is approved, the market could see yet another significant chunk of selling pressure on bitcoin. In January, bankrupt exchange FTX sold over $1 billion worth of GBTC holdings. That coincided with the price dropping to $39,000 from $49,000.
Nearly $1.4 billion of Genesis’ assets were held in Grayscale Bitcoin Trust (GBTC), which has since converted to become a spot exchange-traded fund (ETF). It also holds $165 million in Grayscale Ethereum Trust and $38 million in Grayscale Ethereum Classic Trust, the filing shows.
Some of the GBTC shares were transferred to the crypto exchange Gemini by Genesis as collateral as part of the Gemini Earn program, the filing stated. Genesis seeks an additional 31 million GBTC shares that were pledged to Gemini but never transferred, the filing added.
Genesis and Grayscale made up key parts of Digital Currency Group’s crypto empire, which was hit by losses and controversies as prominent funds and exchanges went bust in 2022, sparking a domino effect that caused Genesis to declare bankruptcy last year.
Genesis’ biggest creditor is Gemini, which estimates that more than 100,000 of its users are affected by the bankruptcy and are owed a total of between $1 billion and $10 billion.
The lender further owes over $3.5 billion to its top 50 creditors, which also include trading giant Cumberland, Mirana, MoonAlpha Finance and VanEck’s New Finance Income Fund.