In 2022, cryptocurrency lender Genesis (Genesis Global Trading) caused a liquidity crisis due to the collapse of exchanges FTX and 3AC, and officially filed for bankruptcy in January last year. Genesis began to gradually liquidate assets to repay creditors, and in February this year received court approval to sell approximately $1.6 billion of Grayscale Trust assets it held, including more than $1.3 billion of GBTC shares. Then in May, Genesis was allowed to distribute $3 billion worth of cash and cryptocurrency to creditors, representing about 77% of total customer claims.
Although it is good for creditors to get their assets back, some community users are worried that this will bring further selling pressure to the market.
Genesis has transferred 40,000 ETH today
Just this morning, according to Arkham data, Genesis transferred 27,500 ETH to a new address (0xcbCF) at 9:43 Taiwan time, worth approximately US$87.09 million. Two minutes later, Genesis transferred 12,500 ETH to another new address (0x72FE), worth approximately $39.59 million. Before the deadline, a total of 40,000 ETH had been transferred, with a total value of approximately US$127 million.
In addition, Genesis has transferred a total of 13,200 BTC to Coinbase in the past month, worth approximately US$760 million. These moves may be preparations to repay creditors and may be one of the reasons why the cryptocurrency market has been unable to break out in the near future.
The timing of Genesis's transfer of Bitcoin coincided with the period when the price of the currency fell below $60,000 in early July. Therefore, the reasons for the price of the currency at that time were in addition to the bad news about the German government's liquidation, Mt. Gox's repayment, and the transfer of Bitcoin from the United States. , it cannot be ruled out that it is affected by the liquidation process carried out by Genesis.
Now that Genesis is transferring Ethereum again, this may put downward pressure on the price of Ethereum and requires continued attention.
Genesis parent company DCG cannot recover compensation
It is worth mentioning that Genesis’ $3 billion cash and cryptocurrency repayment plan does not include its parent company DCG, U.S. Bankruptcy Court Judge Sean Lane said:
The record clearly shows that after unsecured creditors are paid, the value of the debtor's assets is insufficient to enable DCG, as an equity holder, to recover its losses, even if the court uses DCG's valuation method, which DCG holds as an equity position in light of the creditor's substantial claims. People will still lose billions of dollars.
Sean Lane added that even if it were ruled that customer claims were capped, Genesis would have to prioritize paying $32 billion in claims to numerous creditors, including federal and state financial regulators, before distributing the funds to equity holder DCG.
DCG has long been opposed to Genesis's repayment plan, and in February filed a motion with the court claiming that Genesis violated U.S. bankruptcy law by proposing to pay creditors more than they had legal claims to.
DCG believes that Genesis should compensate customers and creditors for their losses based on the value of cryptocurrency in January 2023. According to the valuation of crypto assets at that time, the assets held by Genesis are sufficient to repay creditors 100%, and there are still remaining assets to pay to DCG.
