Genesis Global Capital has filed a lawsuit against Digital Currency Group (DCG) and Digital Currency Group International (DCGI), seeking repayment of multiple loans with a principal amount of more than $600 million.
Filings filed Thursday allege that DCG borrowed up to $500 million across four different loans from Genesis in 2022, while DCGI borrowed 18,697.7 BTC in 2019. DCG and Genesis entered into master loan agreements on November 10 of last year, and each of these Agreements The 2022 loans had an extended or normal maturity date of May 9 or 10, 2023. DCGI entered into a principal loan agreement with Genesis on June 21, 2019, with a similar extended maturity date for 2023. Genesis and DCGI are both subsidiaries of DCG, which is also the parent company for CoinDesk.
Genesis, which filed for bankruptcy in January this year, alleged in its filings on Wednesday that DCG and DCGI “illegally own property” owned by bankrupt Genesis Global Capital.
The filings said each of those loans were due for repayment as of this past May, but DCG appears to want to convert the loans into “open loans,” sending notifications to Genesis on May 9. However, it is alleged that the former cryptocurrency lender, Genesis, did not consent to this transfer, and retained its rights to repayment.
“DCG’s May 9 request for telegraphic instructions to repay the loans at 10:37 p.m. (ET) on May 9, 2023 does not constitute a “timely” request as provided in the Mutual Legal Assistance Agreement,” DCG’s filing reads. . “Since Section II(c)(1) of the DCG MLA provides that, following DCG’s request for a wire transfer instruction, the GGC must provide a wire transfer instruction no later than the day prior to the due date for a particular loan, DCG’s request of May 9 cannot constitute timely notice with respect to the May 9 Loan or May 10 Loan (because it was sent on, and not before, the May 9 Loan Due Date, and was sent approximately 90 minutes before midnight on the day prior to the May 10 Loan Due Date ).”
As of Wednesday, DCG owed Genesis $500 million, while DCGI owed 4,550.5 BTC (worth about $117 million at press time), the two filings say. Genesis is also looking for late fees and accrued interest, saying that money is “property that the debtor can use” in the ongoing bankruptcy case.
In a statement, a DCG spokesperson said, “Genesis has agreed to continue to conduct sales until we can move forward with the document-in-principle deal reached with Genesis, UCC, and DCG. We are documenting the forbearance agreement and expect” to be brought to court shortly. . At this point, we will begin distributing the funds and continue on the path to a significant recovery for Genesis creditors.”
Update (September 6, 2023, 19:50 UTC): Adds a DCG statement.