A recent development in the ongoing liquidation process of Genesis Trading has caught the attention of the crypto community. A large creditor of Genesis Trading conducted a significant Ethereum sale, signaling a crucial step in the bankruptcy proceedings. This particular creditor, the largest recipient of the bankruptcy proceedings, sold 12,100 Ethereum (ETH) valued at $31.43 million in just three days. The sale came after Genesis Trading repaid the creditor in August.
The creditor, who received a substantial allocation of 114,502 ETH valued at $358.19 million on August 2, began selling off part of its assets on September 23. The transactions were made with FalconX, an institutional crypto brokerage, and resulted in the movement of a large portion of the creditor’s Ethereum holdings. The sales were conducted in multiple phases over three days, with the largest transfer of 7,099 ETH worth $18.56 million occurring on September 25. This significant transaction has the potential to impact Ethereum’s short-term market trajectory, especially in the current uncertain market conditions.
The sale of Ethereum by the Genesis creditor reflects wider market movements impacting the cryptocurrency. Ethereum experienced a price spike between September 17 and 21, but has since stabilized into sideways trading. At the time of writing, Ethereum is trading at $2,634, showing a 0.80% increase in the last 24 hours. Experts believe that large transactions like the one conducted by the Genesis creditor could lead to temporary dips or increased volatility in Ethereum’s price as investors react to the news.
The Genesis liquidation process is taking place following the company’s filing for Chapter 11 bankruptcy in 2023. The decision to file for bankruptcy was primarily due to financial distress caused by exposure to the collapses of Three Arrows Capital (3AC) and FTX. The default of 3AC on a $2.4 billion loan, along with its close ties to FTX, significantly impacted Genesis Trading’s liquidity. Other contributing factors included liquidity issues, regulatory scrutiny, and the overall decline in the crypto market.
Genesis Trading owes several creditors a total of $3.4 billion, including well-known entities like Gemini, Bybit’s Miramar, Decentraland, and VanEck. The company is now in the process of distributing $4 billion in assets to creditors as part of its bankruptcy restructuring. Recovery rates vary among different creditors, with Bitcoin creditors receiving about 51.28%, Ethereum creditors getting 65.87%, and stablecoin holders receiving 100% of their holdings. Genesis has also established a $70 million litigation fund to pursue legal actions against third parties, including its parent company, Digital Currency Group (DCG).
In conclusion, the recent Ethereum sale by a large Genesis creditor marks a significant development in the company’s liquidation process following its bankruptcy filing. The sale has the potential to impact Ethereum’s market trajectory and volatility in the short term. Genesis Trading’s decision to file for bankruptcy was driven by various factors, including exposure to collapsed entities, liquidity issues, regulatory scrutiny, and market conditions. The distribution of assets to creditors and the establishment of a litigation fund demonstrate the company’s efforts to navigate through the bankruptcy proceedings and address its financial obligations.Observers will continue to monitor the situation closely as it unfolds and analyze the implications on the broader cryptocurrency market.
