• Genesis has officially sued Digital Currency Group (DCG) and Digital Currency Group International (DCGI) for loan repayment default.

• According to the report, DCG alone borrowed up to $500 million in four different loans with a maturity date set on May 9 or 10, 2023.

In January this year, Genesis Global Holdco LLC filed for Chapter 11 bankruptcy protection in New York after a general crypto winter triggered by two major collapses in the ecosystem affected its operation. After several months, the company has filed a lawsuit against Digital Currency Group (DCG) and Digital Currency Group International (DCGI), demanding a repayment of multiple loans with principal amounts worth over $600 million. 

According to the report, DCG on four different occasions borrowed an amount of up to $500 million from Genesis in 2022. In November of that same year, both parties entered into a master loan agreement, requiring that each loan gets a normal maturity date of May 9 or 10, 2023. 

DCGI, on the other hand, is reported to have borrowed 18,697.7 BTC in 2019 from Genesis in 2019. In their master loan agreement on June 21, 2019, DCGI had the same 2023 extended maturity date. According to the filing, DCG and DCGI are in wrongful possession of properties belonging to Genesis Global Capital’s bankruptcy estate. 

The report further discloses that DCG, after the loan maturity date, instead requested to convert the loans to “Open Loans.” Genesis was informed about this on May 9. However, Genesis objected to this proposal. The DCG filing states:

Because Section II(c)(i) of the DCG MLA contemplates that, following DCG’s request for wire instructions, GGC shall provide the wire instructions no later than the day prior to the Maturity Date of a given Loan, the May 9 DCG Request cannot constitute timely notice with respect to the May 9 Loan or the May 10 Loan (given that it was sent on, not before, the Maturity Date for the May 9 Loan, and was sent approximately 90 minutes before midnight on the day prior to the Maturity Date for the May 10 Loan).

More on the Genesis and its Debtors 

As of the time of writing, DCGI owed 4,550.5 BTC ($117 million) in addition to a late fee and accrued interest that is being demanded by the plaintiff. According to Genesis, the amounts are properties that could still be used by the defendant while the bankruptcy case is still going on. 

A DCG spokesperson is reported to have said that Genesis has agreed to a turnover action.

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. 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.

It is important to note that Genesis also owes $3.5 billion to its top 50 creditors including crypto exchange Gemini. Its woes came after the collapse of the FTX empire, forcing it to suspend customers’ withdrawals. Since then, it has been struggling to raise new funds or reach an agreement with its creditors. 

For now, the impact of this lawsuit on the crypto market is difficult to ascertain, but in the last 24 hours, most of the crypto assets were in “greens.”