Genesis Takes Legal Action Against DCG Over $600M Debt Dispute
- Genesis Global Capital sues DCG for $600 million in unpaid loans and Bitcoin.
- The company seeks to recover principal, interest, and late fees.
- Talks are ongoing, but DCG owes over $1.7 billion to creditors, impacting the crypto lending sector.
In a legal dispute that unfolded on Wednesday, Genesis Global Capital, the bankrupt cryptocurrency lending unit, has filed a lawsuit against its parent company, Digital Currency Group (DCG), and DCG International Investments Ltd. This move comes as both parties are in negotiations over the repayment of loans exceeding $600 million, which matured in May.
According to Reuters, Genesis Global Capital is seeking to recover $500 million that DCG borrowed through four loans, along with 4,550 Bitcoins, valued at approximately $117 million, owed by Digital Currency Group International under a fifth loan.
The loans were issued under master loan agreements signed in 2022 and 2019, with maturity dates extended to May 2023.
The company asserts that these loans remain unpaid, and they aim to reclaim both the principal amounts and the accrued interest, emphasizing the significance of these recoveries for their bankruptcy estate.
However, Genesis has indicated a willingness to explore a “partial repayment” arrangement with DCG, and they intend to cease legal actions if a settlement is reached. Court documents reveal that DCG owes more than $1.7 billion to Genesis and other creditors.
Earlier, Genesis proposed a restructuring deal that could provide unsecured creditors with a recovery rate of nearly 90%, contingent on support from key creditors, including Gemini, owned by the Winklevoss twins.
Genesis filed for Chapter 11 bankruptcy protection in January 2023, following the suspension of withdrawals and significant loans to hedge funds Three Arrows Capital and Alameda Research, both of which had filed for bankruptcy in 2022.
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