Troubled crypto lending firm Genesis has purportedly acquired $2.1 billion worth of Bitcoin (BTC) following the divestment of roughly 36 million shares of the Grayscale Bitcoin Trust (GBTC).

As per a report from Bloomberg Law citing court documents filed on April 5, Genesis liquidated 36 million of its GBTC shares and utilized the proceeds to purchase 32,041 Bitcoins, intending to utilize them in repaying creditors.

Authorization from the New York bankruptcy court was granted for the sale of the GBTC shares on February 14, along with shares from Grayscale Ethereum (ETH) trusts. Genesis had initially sought approval when the GBTC shares were valued at nearly $1.4 billion.

Likewise, the shares in Grayscale Ethereum Trust were appraised at $165 million, and those from Grayscale Ethereum Classic Trust stood at $38 million.

However, these valuations have seen substantial shifts due to the recent surge in Bitcoin prices. At the present Bitcoin price hovering around $68,000, the coins procured with the proceeds from the GBTC shares alone are now valued at nearly $2.2 billion.

The distressed crypto lender intends to allocate these coins to its Gemini Earn creditors as part of its debt settlement strategy. This development follows contentions from the Digital Currency Group (DCG), Genesis’s parent company, regarding the proposed repayment plan, which DCG contends would overcompensate lenders.

The reaction from the crypto community has been varied. While cryptocurrency exchange Coinbase expressed confidence that the sell-off would likely remain contained within the crypto ecosystem without causing significant market disruptions, concerns persist regarding the potential ramifications for GBTC and the broader crypto sector.

Genesis's financial woes trace back to the repercussions of the FTX bankruptcy in late 2022, which disrupted its lending operations and exerted pressure to reimburse substantial locked deposits. This compelled Genesis to explore diverse avenues, including enlisting investment bank Moelis & Co. and announcing a 30% reduction in its workforce.

The bankruptcy filing cast a shadow on Genesis and raised apprehensions about the stability of Grayscale Bitcoin Trust. Observers of the market were particularly wary of a possible liquidation of over 600,000 Bitcoins linked to the Genesis bankruptcy.

In the midst of these challenges, the crypto lender recently settled a lawsuit with New York Attorney General Letitia James concerning allegations pertaining to its Earn program. The settlement aims to restore assets to former Earn customers and other Genesis creditors, subject to approval by a bankruptcy judge.