Genesis Global Capital (GGC), the bankrupt cryptocurrency lender, has taken legal action against Digital Currency Group (DCG) and DCG International Investments (DCIG), both affiliated companies, seeking repayment of overdue loans totaling over $600 million.
Genesis vs. DCGI: The Bitcoin Loan Dispute
In June 2022, GGC entered into an open loan agreement with DCGI, lending them 18,697.7 Bitcoin. Subsequently, the loan terms were converted into a fixed-term loan due on May 11, 2023.
However, a substantial balance of 4,550.5 BTC remained unpaid. DCIG requested a conversion of the debt back into an open loan, which GGC declined. The unresolved dispute centers around the repayment of this loan, inclusive of interest and late fees.
Genesis vs. DCG: $500 Million Loans at Stake
Genesis Global Capital made four loans to DCG in 2022, totaling $500 million, with maturity dates on May 11 and May 13, 2023. DCG asserted its ability to convert these loans into open loans under a prior agreement, but GGC disagreed. The lawsuit seeks the repayment of the principal amount, excluding late fees, as the parties engage in ongoing negotiations.
Mediation and Ongoing Negotiations
Both lawsuits have undergone mediation, which concluded in August. Negotiations are still ongoing, with the outstanding balance of 4,550.5 BTC worth approximately $116,875,000 at the time of writing. The resolution of these disputes remains uncertain.
DCG has signaled a willingness to resolve these issues, stating,
“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.”
A forbearance agreement is in the works, promising a path towards substantial recovery for Genesis creditors.
Genesis Global Capital’s Bankruptcy and Debts
GGC declared bankruptcy in January, having halted withdrawals and new loan activities in November. The company owes a staggering $3.5 billion to its top 50 creditors, adding complexity to its financial woes.
DCG previously reached an agreement in principle with unsecured creditors of GGC on August 29. This agreement aims to return 70-90% of the dollar equivalents owed, though not all parties are in support. Notably, the ad hoc creditors’ committee and cryptocurrency exchange Gemini did not endorse this agreement.
Read More:
New Regulations Proposed by US Treasury and IRS for Cryptocurrency Brokers
Ripple Labs Chair Criticizes Biden and Gensler for Mishandling Crypto