2 days ago
Digital Currency Group (DCG) has sued its lending subsidiary Genesis, asking a bankruptcy tribunal to corroborate it is owed much than $105 cardinal positive involvement connected a fiscal backstop extended during the 2022 crypto downturn.
The case, filed connected Aug. 14 successful the U.S. Bankruptcy Court for the Southern District of New York, centers connected a $1.1 cardinal promissory enactment DCG issued to Genesis aft the implosion of hedge money Three Arrows Capital (3AC).
According to the complaint, 3AC, 1 of Genesis’s largest borrowers, defaulted connected a $2.36 cardinal borderline telephone successful mid-2022, creating a important shortage successful Genesis Asia Pacific’s equity, a DCG-owned entity.
DCG said it injected the enactment “voluntarily” to stabilize the business, but argued that erstwhile crypto markets rebounded, Genesis profited from collateral tied to 3AC acold beyond the note’s archetypal value. Those gains, it contends, reduced the main equilibrium and present permission $105 cardinal outstanding.
In a statement, DCG said it “took bonzer efforts” to support Genesis afloat successful 2022 and simply wants the tribunal to “confirm” repayment status.
The filing adds different quality to the strained narration betwixt the 2 companies. Earlier this year, Genesis’s litigation oversight committee sued DCG, its CEO Barry Silbert, and different executives, alleging that billions of dollars were wrongfully taken from the lender successful 2022.
Genesis, 1 of respective high-profile firms to collapse successful the aftermath of the FTX bankruptcy, halted lending successful precocious 2022 and filed for Chapter 11 extortion successful aboriginal 2023.
It emerged from restructuring past twelvemonth and began distributing astir $4 billion to creditors, with betterment amounts varying by plus type. As an equity holder, DCG is among the past to beryllium repaid and has challenged parts of the bankruptcy plan.
The station DCG sues Genesis implicit promissory enactment indebtedness amid bankruptcy challenges appeared archetypal connected CryptoSlate.
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