Cryptocurrency Lender Genesis Global Capital Files Lawsuit Against Parent Company DCG Over $610 Million Loan Dispute
Genesis Global Capital, the cryptocurrency lending unit, has taken legal action against its parent company, Digital Currency Group (DCG), in a high-profile dispute over a $610 million loan repayment. The lawsuit comes as both parties grapple with loans that reached maturity in May.
According to Genesis Global Capital’s lawyers, the disagreement stems from a master loan agreement established in 2019 between Genesis and DCG. This agreement has now escalated into a complex legal battle.
Genesis claims that it provided loans amounting to over 18,000 bitcoins to DCG in 2022, converting the debt into a fixed-term loan. Now, in a complaint filed with the Manhattan bankruptcy court, Genesis Global Capital seeks to recover $500 million that DCG borrowed through four loans.
In addition to this, Genesis has lodged a separate complaint, aiming to retrieve 4,550 bitcoins worth approximately $117 million. These bitcoins are owed by DCG’s affiliate, Digital Currency Group International, under a fifth loan.
Responding to the lawsuit, DCG has stated that it intends to file a settlement with the bankruptcy court soon. DCG, with its prominent presence in the cryptocurrency industry through assets like CoinDesk and Grayscale, has not sought bankruptcy protection despite the ongoing legal dispute.
This is not the first time that Genesis Global Capital has encountered financial turbulence in the cryptocurrency space. Previously, it extended substantial loans to hedge funds Three Arrows Capital and Alameda Research, both of which also filed for bankruptcy in 2022. These incidents highlight the volatility and risks associated with cryptocurrency lending.
Genesis Global Capital’s decision to file for Chapter 11 bankruptcy protection in January, shortly after suspending withdrawals, underscores the challenges faced by cryptocurrency lending firms in a highly volatile market.
As the legal battle between Genesis Global Capital and Digital Currency Group unfolds in the Southern District of New York’s bankruptcy court, the cryptocurrency community will closely watch the outcome. This dispute sheds light on the growing complexities and challenges within the rapidly evolving world of digital assets.
