Grayscale, DCG Challenge Genesis’ Asset Liquidation Plan

Grayscale argues lack of authority and warns of legal compliance issues, while DCG suggests postponing asset sales.

Recent court filings indicate that cryptocurrency firm Digital Currency Group (DCG) and Grayscale objected to insolvent lender Genesis’ plan to liquidate its assets, which included shares worth approximately $1.6 billion from Grayscale’s Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE), and Grayscale Ethereum Classic Trust (ETCG).

Grayscale argued in its court filing that it lacked the authority to be compelled to redeem any shares at the debtors’ request.

The company claimed it had not been notified before this development and did not qualify as an authorized participant with the authority to do so.

As per the organization:

“GBTC Shares, ETHE Shares, and ETCG Shares (collectively, the “Trust Shares”) constituting “restricted securities” cannot be sold, assigned, or otherwise disposed of without Grayscale’s prior written consent, which may be provided or withheld in its sole discretion.”

Further, the cryptocurrency firm warned that acquiring Genesis’ demand could compromise its capacity to guarantee adherence to federal securities laws and regulations.

Therefore, the firm respectfully petitioned the court to reject the portion of the motion that sought to invalidate its rights to consent and the requirements for authorized participants.

Grayscale’s Call for Legal Compliance and Court Intervention

Additionally, the company underscored the importance of adhering to its standard operating procedure to guarantee compliance with relevant legislation, such as securities laws, at the federal and state levels.

The company, meanwhile, clarified that it has no intention of impeding or delaying Genesis’s transfer of the assets and does not hold a stance on the matter. DCG, for its part, contended that Genesis’s justifications for divesting the assets are devoid of merit.

The asset management firm recommended that any asset sales be postponed until the conclusion of the debtors’ amended plan hearing. DCG urges the appointment of a specialized intermediary for these assets and suggests consultation before any transactions should the court grant the motion.

DCG objected to the approval of its Genesis bankruptcy plan last week because it benefited the company by overcompensating its creditors.