Genesis Global Capital (Genesis) has taken legal action against its parent company, Digital Currency Group (DCG), and DCG International Investments (DCIG), demanding the repayment of overdue loans totaling over $620 million.
The DCGI Complaint
Genesis lodged two separate complaints in the Southern District of New York Bankruptcy Court, claiming that it had extended a loan of 18,697.7 Bitcoin to DCGI (another DCG subsidiary) in June 2022, initially under an open loan agreement dating back to 2019. This loan was converted into a fixed-term loan due May 11, 2023.
While a portion of the loan was repaid, a balance of 4,550.5 BTC remained. Genesis refused DCGI’s request to convert the debt into an open loan on May 9, and the outstanding balance with interest and late fees is now being sought. As of now, the outstanding balance in the DCGI case amounts to approximately $116,875,000.
The DCG Loans
According to the information reported in the legal filings, In 2022, Genesis provided DCG with four loans totaling $500 million, all maturing on May 11 and May 13, 2023. DCG asserted its right on May 9 to convert these loans into open loans under a prior agreement, which Genesis contested. Genesis is pursuing the repayment of the principal amount without late fees.
Both cases have seen mediation, with the latest session concluding in August. Negotiations between the parties continue.
DCG responded to these lawsuits, stating,
“Genesis has agreed to stay the turnover action so that we can move forward with documenting the deal in principle that was reached with Genesis, the UCC, and DCG. We are documenting a forbearance agreement and expect to file it with the court shortly. At that point, we will initiate the distribution of funds and continue on the path to significant recovery for Genesis creditors.”
On August 29, DCG reached an agreement in principle with Genesis’s unsecured creditors, proposing to return 70-90% of the owed dollar equivalents. However, this agreement did not receive unanimous support, as the ad hoc creditors’ committee and cryptocurrency exchange Gemini did not endorse it.
Resolution with FTX
In separate news, Genesis Global cited a preliminary agreement with FTX to resolve a long-standing dispute at the core of their respective Chapter 11 cases. FTX had initially claimed a debt of up to $3.9 billion, later revised to $2 billion, from Genesis Global, which the crypto lender disputed. Legal representatives from both companies have indicated their intent to settle mutual claims in accordance with the agreement.
The lawsuits against DCG and DCIG mark another chapter in the complex financial struggles of the cryptocurrency lending giant as it seeks to recover its substantial debts and navigate its way out of bankruptcy.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.