Genesis Global Capital has initiated legal proceedings against Digital Currency Group (DCG), alleging that DCG has failed to repay several loans amounting to hundreds of millions of dollars, all of which were due in May.
According to Genesis’s legal representatives, the genesis of this financial dispute dates back to 2019 when both Genesis and DCG entered into a “master loan agreement.” This agreement laid the groundwork for a series of transactions that eventually led to Genesis loaning over 18,000 Bitcoins to DCG in 2022. Subsequently, later that same year, this debt was transformed into a fixed-term loan with a maturity date of May 11, 2023.
The heart of the matter lies in the fact that this loan, referred to as the “DCGI Loan,” came due on May 11, 2023, and according to Genesis, DCG has not repaid it. Genesis’s legal team also revealed that in November 2022, an “amended and restated master loan agreement” was established between the two entities, further complicating the legal entanglement.
DCG has responded to these allegations by stating that they are working to document a forbearance agreement reached in principle between DCG, the UCC (Unsecured Creditors Committee), and Genesis. According to a DCG spokesperson, this documentation is expected to be filed with the court shortly, enabling the distribution of funds and progress toward substantial recovery for Genesis creditors.
Genesis struggles
The backdrop to this legal dispute is the financial challenges faced by Genesis Global Holdco, a subsidiary of Genesis Global Capital. Genesis experienced financial setbacks following the collapses of the cryptocurrency hedge fund Three Arrows Capital and the cryptocurrency exchange FTX in the previous year. In response to its mounting debt, Genesis Global Holdco filed for bankruptcy protection in January. The company found itself owing substantial sums to its creditors, running into the billions.
In addition to the ongoing legal battle with Genesis, DCG and its CEO, Barry Silbert, also faced legal action from the cryptocurrency exchange Gemini in July. Gemini accused Silbert of being the “architect and mastermind” behind a purported fraud scheme involving DCG and Genesis against creditors. The exchange, co-founded by Cameron Winklevoss, demanded that Silbert immediately settle a debt of $640 million, which Gemini claims is owed to its Earn clients. Failure to comply with this demand would result in a lawsuit against Silbert.
Source: https://www.cryptopolitan.com/genesis-accuses-dcg-of-massive-debt-dodge/