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These transfers come in the wake of a significant settlement Genesis reached with New York State.
Genesis Trading, a leading crypto lender currently in bankruptcy proceedings, has recently shifted a notable amount of Ethereum (ETH), hinting at potential asset liquidations.
This action reflects Genesis’s ongoing efforts to manage its financial and legal issues amidst its bankruptcy case.
Significant Ethereum Transfers Spark Concern
Arkham Intelligence reported that Genesis Trading moved 40,000 ETH, worth approximately $126.8 million, to two separate addresses on August 2. The first transaction involved 27,500 ETH, valued at about $87.09 million, sent to an address beginning with 0xcbCF.
At the same time, another 12,500 ETH, worth $39.59 million, was transferred to an address starting with 0x72FE. These transactions follow an earlier transfer of 9,644.4 ETH, approximately $31.61 million, on July 31. Additionally, Genesis has moved over 12,600 BTC, valued around $719.9 million, in recent months.
Genesis Trading transferred 27,500 ETH to the address starting with 0xcbCF at 9:43 UTC+8 today, worth about $87.09 milliom, and transferred 12,500 ETH to the address starting with 0x72FE, worth about $39.59 million, suspected of executing bankruptcy liquidation procedures.…
— Wu Blockchain (@WuBlockchain) August 2, 2024
Settlement and Bankruptcy Fallout
These transfers come in the wake of a significant settlement Genesis reached with New York State. In May, the company agreed to a historic $3 billion settlement over allegations of defrauding 230,000 investors through its Earn program. This settlement is the largest of its kind in New York’s history and has prompted the state’s Attorney General to call for stricter regulations on the crypto industry.
Genesis’s legal issues extend beyond this settlement. The lawsuit implicated not only Genesis but also its parent company, Digital Currency Group (DCG), and prominent figures such as Barry Silbert and former 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 scheduled to begin in January 2025.
The cryptocurrency market is closely monitoring these developments, speculating on whether the potential liquidations by Genesis will impact Ethereum’s price and broader market trends.
Parent Company DCG Likely to Face Recovery Setbacks
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 repaid, 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 highlights the severe financial strain on both Genesis and DCG, reflecting ongoing instability in the crypto sector.
