In a strategic maneuver to tackle its financial responsibilities, the troubled cryptocurrency lending firm Genesis has transformed around 36 million shares of the Grayscale Bitcoin Trust (GBTC) into Bitcoin, aiming to settle debts with creditors.

This transformation took place on April 2, with GBTC shares priced at approximately $58.50 each at the time of conversion, according to Bloomberg.

This move follows Genesis receiving the green light from the U.S. bankruptcy court in early February to sell GBTC shares, which were then valued at $38.50. Since then, the GBTC share price has surged by 50%.

The conversion of GBTC shares resulted in a $2.1 billion revenue for Genesis, which it utilized to acquire 32,041 Bitcoin at $65,685 per Bitcoin on the same day. This acquisition is intended to meet the firm's obligations towards its creditors, with the acquired Bitcoin currently valued at around $2.18 billion.

The cryptocurrency community has been keeping a close eye on this significant transaction, worried about its potential influence on the market.

Coinbase, however, has eased concerns, indicating that the move is likely to have a minimal impact on the market as the funds remain within the cryptocurrency ecosystem.

Genesis's bankruptcy plan allows the firm to either directly convert GBTC shares into Bitcoin for creditors or sell them and distribute the proceeds.

This development comes after the Digital Currency Group reaffirmed its subsidiary Genesis's commitment to repaying customers beyond their due entitlements.

Genesis has also recently agreed to a $21 million settlement with the SEC to resolve a civil lawsuit related to its operations, including the temporary suspension of withdrawals from Gemini Earn following the FTX bankruptcy.

Genesis's financial difficulties intensified after the SEC's lawsuit led to its bankruptcy filing last year.

A recent court ruling has allowed the SEC's lawsuit against Gemini and Genesis to proceed, dismissing motions by both companies to dismiss the lawsuit, which involves allegations of selling unregistered securities through the Gemini Earn program.

This legal development highlights the ongoing challenges and regulatory scrutiny facing the cryptocurrency industry.