Genesis Sues DCG to Recover $620 Million in Outstanding Loans

Genesis Global has initiated legal action against its parent company, Digital Currency Group (DCG), seeking to recover $620 million in unpaid loans as part of its ongoing bankruptcy proceedings and settlement discussions.

The lawsuit was filed on September 6 in a bankruptcy court in New York.

Central to Genesis’ lawsuit are loans that they assert matured in May, including a $500 million loan to DCG and another loan to DCG International Investments Ltd., which is valued at approximately 4,550 BTC. The lawsuit also seeks to recover accrued interest and late fees associated with these loans.

A representative from DCG noted that “the action to freeze the turnover has been mutually deferred so that a formal agreement, agreed upon in principle among Genesis, the Unsecured Creditors Committee, and DCG, can be thoroughly documented.” The repayment of the loans is contingent upon the preparation and presentation of a formal standstill agreement to the bankruptcy court.

Earlier this year, Genesis Global filed for Chapter 11 bankruptcy protection, joining several other crypto firms that have faced financial difficulties. In August, Genesis proposed a repayment plan totaling $1.4 billion in an effort to settle its debts. While this plan garnered some support from select customers, other important creditors remain opposed.

Genesis has also presented a resolution proposal that could allow unsecured creditors to recover up to 90% of their investments. For this proposal to move forward, Genesis must secure approval from key dissenting parties, including the crypto firm Gemini Trust Co.

In response, DCG stated that the proposed restructuring plan lays the groundwork for addressing ongoing concerns within the Genesis Chapter 11 proceedings, emphasizing that the framework would substantially benefit creditors by facilitating significant recoveries.