DCG And Genesis Possible Major Legal Dispute With Alameda Research

Messari founder thinks DCG and Genesis there could be a big legal dispute with Alameda as Genesis cut a lot of their positions responsibly and recovered the loan however Genesis had to recover money from Alameda then That date must be before August 13.

Messari founder Ryan Selkis tweeted: DCG and Genesis issued over $10 billion in loan contracts in the second and third quarters. Considering that Alameda and Genesis are the two largest companies in the world. No counterpart which crypto lenders, and potentially loans between them.

It seems Genesis is responsibly reducing a lot of their positions and canceling loans. Alameda or FTX do not appear to be current creditors of Genesis. If so, then Alameda and Genesis two giants either have no relationship (unlikely) or they have closed their positions.

If Genesis withdraws funds to Alameda, that is good risk management, but the exact final withdrawal date will be critical to DCG and Genesis settlement. That’s because there is a 90-day recovery period in bankruptcy and FTX bankruptcy cases on November 11. That means if Genesis recovers funds from Alameda then that date must be before August 13, if otherwise the money may be withdrawn.

Ryan Selkis posed three questions:

1. Did Genesis borrow money from Alameda?
2. What is the amount recovered after August 13, if any?
3. Can the money be recovered?

“Parts 1-2 of this are easy to answer as part of new investor/lender diligence to DCG-Genesis. BUT if there’s a big number that changed hands after 8-13, I’m not sure how someone new to DCG underwrites that risk”.

Selkis analyzes

Worse yet, it would be a “long-term liability” that would depend on the outcome of the multi-year, extremely complicated FTX bankruptcy proceedings. Therefore, the risk that can be accepted over a timeline corresponding to the current restructuring need has been addressed.

So the following questions that we face are key to answering whether the crisis is over or there are more questions to be answered, namely: Where is GBTC? Is DCG promissory note callable? Does Genesis raise funds from Alameda Research during 90 days of bankruptcy?

Selkis cautioned on the last issue that this could lead to a major legal battle, so it is difficult to determine the likely scope of responsibility for the outcome.

In a recent episode of Unchained’s “The Chopping Block,” Haseeb Qureshi, a partner at Dragonfly Capital, stated that Genesis creditors can ask DCG to buy back Genesis’ $1.1 billion 10-year bond.

This will cause DCG’s liquidity to dry up and lead to its bankruptcy. For now, the prolonged silence from Genesis’ creditors could mean that they are giving DCG and Genesis time to work things out.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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