Key Points
- Genesis Trading, a crypto lender in bankruptcy, has moved a significant amount of Ethereum (ETH), hinting at potential asset liquidation.
- The company’s recent financial activities and legal issues have sparked concerns in the cryptocurrency market.
Genesis Trading, a prominent cryptocurrency lender currently dealing with bankruptcy proceedings, has recently transferred a significant quantity of Ethereum (ETH). This move suggests a possible liquidation of assets.
This action is indicative of Genesis’s continued efforts to handle its financial and legal issues during its ongoing bankruptcy case.
Large Ethereum Transfers Raise Concerns
Arkham Intelligence has reported that Genesis Trading transferred 40,000 ETH, equivalent to approximately $126.8 million, to two different addresses on August 2. The first transaction involved 27,500 ETH, worth about $87.09 million, sent to an address beginning with 0xcbCF.
Simultaneously, another 12,500 ETH, valued at $39.59 million, was moved to an address starting with 0x72FE. These transactions follow an earlier transfer of 9,644.4 ETH, roughly $31.61 million, on July 31. In addition, Genesis has shifted over 12,600 Bitcoin (BTC), valued at about $719.9 million, in recent months.
Settlement and Bankruptcy Aftereffects
These transfers occur following a substantial settlement Genesis reached with New York State. In May, the firm agreed to a record $3 billion settlement over allegations of defrauding 230,000 investors through its Earn program. This settlement is the largest in New York’s history and has led the state’s Attorney General to demand stricter regulations on the cryptocurrency industry.
Genesis’s legal problems extend beyond this settlement. The lawsuit implicated not only Genesis but also its parent company, Digital Currency Group (DCG), and notable individuals such as Barry Silbert and ex-Genesis CEO Soichiro Moro. The case alleges that Genesis failed to adequately disclose the risks associated with its Earn program. Meanwhile, former Celsius CEO Alex Mashinsky faces criminal charges related to fraud, with his trial set to commence in January 2025.
The cryptocurrency market is closely observing these developments, speculating on whether the potential liquidations by Genesis will influence Ethereum’s price and broader market trends.
Parent Company DCG Expected to Face Recovery Challenges
Genesis’s approval to distribute cash and cryptocurrencies to its creditors did not extend to its parent company DCG. The court authorized Genesis to release and return assets that have been frozen since November 2022, excluding any of DCG’s investments.
Creditors with claims in USD will be fully compensated, excluding any post-petition interest, while those with cryptocurrency claims will experience a shortfall. This distribution covers approximately 77% of the total claims’ value. The court rejected DCG’s proposal to cap recovery based on cryptocurrency values at the time of Genesis’s bankruptcy, leaving DCG with significant financial losses.
The court’s decision underscores the severe financial strain on both Genesis and DCG, reflecting ongoing instability in the crypto sector.
