Genesis Global Capital sues Digital Currency Group over unpaid bitcoin loans

Quick Take

  • Digital Currency Group, which owns bankrupt crypto lender Genesis, faced the heat on Wednesday over allegations that it borrowed thousands in bitcoin and hasn’t paid it back.

Genesis Global Capital is suing Digital Currency Group over several unpaid loans due in May that add up to hundreds of millions of dollars.

DCG and Genesis entered into a "master loan agreement" in 2019, lawyers for Genesis said on Wednesday, according to a filing under the U.S. Bankruptcy Court in the Southern District of New York. According to the documents, Genesis said it loaned over 18,000 bitcoin to DCG in 2022 and later that year converted the debt into a a fixed-term loan with a maturity date of May 11.

"The DCGI Loan matured on May 11, 2023, and was not repaid," according to the filing. 

In a separate court document also filed on Wednesday, lawyers representing Genesis said the crypto lender and DCG entered into an "amended and restated master loan agreement" in November 2022. 

"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 spokesperson for DCG said in an emailed statement. "We are documenting a forbearance agreement and expect to file it with the court shortly. At that point, we will initiate the distribution of funds and continue on the path to significant recovery for Genesis creditors."

Genesis and DCG in the spotlight

Genesis Global Holdco took a financial hit after the collapses of the crypto hedge fund Three Arrows Capital and exchange FTX last year. It subsequently filed for bankruptcy protection in January, owing billions to its creditors. 

Since then, DCG and Genesis Global have been ensnared in a legal battle with exchange Gemini, which sued DCG and its CEO Barry Silbert in July, accusing him of being "the architect and mastermind of the DCG and Genesis fraud against creditors."

Gemini co-founder Cameron Winklevoss gave Silbert an ultimatum in July to immediately pay $640 million he says is owed to Gemini's Earn clients or face a lawsuit.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.