Genesis Sues Parent Company Over $620M Unpaid Loans

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’s Response

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<

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Author: Amara Khatri

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