Recently, the insolvent cryptocurrency lending company, Genesis, has submitted a request to the U.S. Bankruptcy Court in the Southern District of New York, seeking permission to liquidate trust assets totaling more than $1.6 billion. The assets in Genesis’s possession comprise approximately $1.4 billion in Grayscale Bitcoin Trust (NYSEARCA:GBTC), around $165 million in Grayscale Ethereum Trust (OTCQX:ETHE), and roughly $38 million in Grayscale Ethereum Classic Trust (ETCG), as indicated in the filing dated last Friday.
If approved, the sale could exert selling pressure on cryptocurrency prices, similar to the scenario when the price of Bitcoin (BTC-USD) declined following the reported sale of over $1 billion worth of GBTC holdings by the bankrupt crypto exchange FTX.
According to the filing, a portion of the GBTC shares had been used as collateral and transferred to the crypto exchange Gemini as part of the Gemini Earn program. It has come to light that Genesis is now seeking to claim an additional 31 million GBTC shares that were initially pledged to Gemini but never actually transferred.
Back in November, Genesis initiated a lawsuit against the crypto exchange Gemini, aiming to recover more than $689 million, which had been withdrawn by customers of both companies previously.