Digital Currency Group (DCG) is facing a lawsuit from its bankrupt cryptocurrency lending unit, Genesis Global Capital, as the two parties negotiate the repayment of over $610 million in loans that matured in May. Genesis has filed a complaint in Manhattan bankruptcy court seeking to recoup $500 million borrowed by DCG under four loans. Additionally, it has filed a separate complaint to recover 4,550 Bitcoin, valued at about $117 million, owed by the affiliated Digital Currency Group International under a fifth loan. Genesis argues that recovering the unpaid amounts would provide a “significant benefit” to its bankruptcy estate, but DCG is “wrongfully in possession” of the funds.
In related negotiations, Genesis has indicated it is discussing “partial repayment” with DCG and plans to halt the lawsuits if both parties reach a settlement agreement. According to court documents, DCG owes more than $1.7 billion to Genesis and other debtors.
Last month, Genesis announced that it had reached a preliminary agreement with DCG and unsecured creditors. Under the agreement, DCG would pay $275 million and obtain $1.16 billion in new credit facilities maturing in two or seven years to satisfy its obligations. DCG issued a statement confirming its intention to file a settlement with the bankruptcy court soon and proceed with the distribution of funds, aiming for a significant recovery for Genesis creditors.
Genesis filed for Chapter 11 bankruptcy protection in January, two months after halting withdrawals. The filing came after Genesis extended substantial loans to hedge funds Three Arrows Capital and Alameda Research, both of which filed for bankruptcy in 2022. Alameda’s parent company, cryptocurrency exchange FTX, also filed for Chapter 11 bankruptcy.
DCG, whose CEO is Barry Silbert, has not sought bankruptcy protection. The firm also owns crypto news website CoinDesk and digital asset manager Grayscale.
The lawsuits are titled Genesis Global Capital LLC v. Digital Currency Group Inc and Genesis Global Capital LLC v. DCG International Investments Ltd, filed in the US Bankruptcy Court for the Southern District of New York (No. 23-ap-01168 and No. 23-ap-01169, respectively).
(Reporting by Jonathan Stempel in New York; Editing by Stephen Coates)
Credit: The Star : Tech Feed
