Digital Currency Group, the owner of the now-bankrupt crypto lender Genesis, faced criticism on Wednesday for allegedly borrowing a substantial amount of bitcoin and failing to repay it.
Genesis Global Capital is taking legal action against Digital Currency Group (DCG) for several unpaid loans totaling hundreds of millions of dollars that were due in May.
Genesis and DCG had entered into a “master loan agreement” in 2019, according to Genesis’ lawyers, as revealed in a filing with the U.S. Bankruptcy Court in the Southern District of New York. The documents state that Genesis loaned over 18,000 bitcoin to DCG in 2022, and later that year, the debt was converted into a fixed-term loan with a maturity date of May 11.
However, the loan matured on May 11, 2023, and remained unpaid, as per the filing.
In a separate court filing on Wednesday, attorneys representing Genesis disclosed that the crypto lender and DCG had entered into an “amended and restated master loan agreement” in November 2022.
A spokesperson for DCG mentioned in an emailed statement that Genesis had agreed to suspend the turnover action to facilitate the documentation of a preliminary agreement reached with Genesis, the UCC (Unsecured Creditors Committee), and DCG. The spokesperson further stated that they are currently in the process of documenting a forbearance agreement, which will be filed with the court soon. Once this is done, the distribution of funds will commence, and the path toward significant recovery for Genesis creditors will continue.
Genesis and DCG Face Legal Battle Over Unpaid Bitcoin Loans
Genesis Global Holdco faced significant financial challenges after the collapses of the crypto hedge fund Three Arrows Capital and the FTX exchange last year. As a result, it filed for bankruptcy protection in January, owing substantial debts to its creditors.
Following this, DCG and Genesis Global became embroiled in a legal dispute with the Gemini exchange. Gemini sued DCG and its CEO Barry Silbert in July, alleging that Silbert was responsible for orchestrating a fraudulent scheme against creditors on behalf of DCG and Genesis.
In July, Gemini co-founder Cameron Winklevoss issued an ultimatum to Silbert, demanding the immediate payment of $640 million owed to Gemini’s Earn clients or the threat of a lawsuit.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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