Comprehensive compilation: Felix, LianGuaiNews
On September 6th, bankrupt cryptocurrency company Genesis Global filed two lawsuits against Digital Currency Group (DCG) and Digital Currency Group International (DCGI) with the U.S. Bankruptcy Court for the Southern District of New York, claiming that two loans (totaling approximately $620 million) have not been repaid. It demands DCG to repay approximately $500 million in loans, and DCG International to repay approximately 4,550 bitcoins (worth about $117 million). The lawsuit also seeks to recover accrued interest and late fees.
The two documents state that DCG borrowed up to $500 million in funding from Genesis in 2022 through four different loans (three $100 million loans and one $200 million loan). DCG and Genesis signed a master loan agreement on November 10th last year, with the extension or normal maturity date for each loan agreement being May 9th or 10th, 2023. DCGI signed a master loan agreement with Genesis on June 21st, 2019, borrowing 18,697.7 BTC and later converting the debt into a term loan, with a maturity date of May 11th. As of now, DCGI still owes Genesis 4,550.5 bitcoins.
According to documents submitted by Genesis to the court, Genesis believes that DCG and DCGI have “wrongfully possessed” assets belonging to Genesis Global Capital (GGC). The aforementioned loans were all due and payable in May of this year, but DCG wishes to convert these loans into “open loans” (note: open loans can be repaid at any time without incurring any penalties) and sent a notice to Genesis on May 9th.
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Genesis stated that DCG submitted a wire transfer request at 10:37pm (Eastern Time) on May 9th, expressing the idea of converting the loan into an open loan, but this was not a “timely request.” In addition, a GGC representative replied to DCG before midnight and instructed DCG to transfer the funds to GGC.
In response, DCG claims that Genesis did not agree to the conversion and reserves the right to recover. A DCG spokesperson stated in an email statement, “Genesis has agreed to defer layoffs in order to be able to document the principles agreed upon by Genesis, UCC, and DCG. We are drafting an extension agreement and expect to submit it to the court soon. At that time, capital distribution will be initiated and recovery efforts for Genesis creditors will continue.”
In another document, Genesis accuses DCG International of failing to repay 4,550 bitcoins.
“On May 9th, 2023, DCGI requested that GGC ‘suspend termination’ of the DCGI loan originally scheduled to mature on May 11th, 2023, and convert the DCGI loan into an open loan.” However, Genesis did not agree to suspend the termination of the loan.
It is understood that this is not the first loan that has matured but has not been repaid by DCG. In May, cryptocurrency exchange Gemini claimed that DCG failed to pay $630 million (related reading: A Quick Look at Gemini’s Lawsuit Against DCG: 5 Charges and 6 Demands).
Both Genesis and DCGI are subsidiaries of DCG. After the closure of cryptocurrency fund Three Arrows Capital and exchange FTX last year, Genesis Global Holdco suffered a financial blow. The company subsequently applied for bankruptcy protection in January of this year, owing creditors billions of dollars. Since then, DCG and Genesis Global have been involved in a legal dispute with exchange Gemini. In July, Gemini sued DCG and its CEO, Barry Silbert, accusing Barry of being the mastermind and planner of fraud against creditors by DCG and Genesis, and directly and personally participating in this fraudulent behavior. Gemini co-founder Cameron Winklevoss issued a final demand to Silbert in July, requiring him to immediately pay $640 million owed to Gemini Earn customers, or face legal action.
Related reading: What are Gemini co-founders and DCG founders constantly arguing about?
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