Genesis sues parent company DCG, other affiliate for $600M loans, then stays action


Bankrupt cryptocurrency lender Genesis Global Capital (GGC) filed two fits on Sept. 6 looking for the reimbursement of overdue loans from affiliated firms. The loans are value over $600 million in whole. 

GGC filed the complaints in opposition to Digital Currency Group (DCG) and DCG International Investments (DCIG) within the Southern District of New York Bankruptcy Court. GGC and DCGI are each owned by DCG.

According to the criticism in opposition to DCGI, GGC loaned it 18,697.7 Bitcoin (BTC) in June 2022 beneath an open mortgage settlement reached in 2019. The excellent stability of the mortgage was transformed in November to a fixed-term mortgage due on May 11, 2023. The mortgage was partially repaid, and a stability of 4,550.5 BTC remained.

The Genesis go well with in opposition to DCG. Source: PACER

DCIG despatched GGC a request on May 9 to transform the debt again into an open mortgage. GGC didn’t comply with that, however the stability was not paid. GGC is demanding the reimbursement of the mortgage with curiosity and late charges.

The events underwent mediation that resulted in August however proceed to barter, the criticism stated. At the time of writing, 4,550.5 BTC are value round $116,875,000.

Related: Digital Currency Group files motion to dismiss Gemini lawsuit, claiming it’s a PR campaign

According to the other criticism, GGC made 4 loans to DCG in 2022 value a complete of $500 million. Those loans matured on May 11 and May 13, 2023. DCG expressed the view on May 9 that it was capable of convert these loans to open loans as nicely beneath a previous settlement, however GGC didn’t agree.

GGC is looking for the reimbursement of the principal with out late charges. These loans, too, had been beneath mediation and are topic to persevering with talks.

The fits could not come to judgment, nevertheless. A DCG spokesperson advised Cointelegraph in an announcement, “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.”

GGC declared chapter in January. It had suspended withdrawals and new mortgage exercise in November and laid off workers within the runup to its chapter submitting. It owes $3.5 billion to its prime 50 collectors.

DCG reached an agreement in principle with GCC unsecured collectors on Aug. 29 that will return 70-90% of the greenback equivalents owed, though the advert hoc collectors’ committee and cryptocurrency trade Gemini did not support the agreement.

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This article was up to date on Sept. 6 at 22:00 UTC to incorporate an announcement from DCG.