DCG Agrees Genesis Loan Repayment Plan to End $620 Million Lawsuit

Crypto lender Genesis Global Capital and its parent company, Digital Currency Group, have come to an agreement to end the ongoing lawsuit over $620 million that DCG allegedly owes to Genesis. Genesis sued its parent company this September, claiming that DCG and DCGI (Digital Currency Group International) owed it $627 million across four different loans. DCG has made some payments of approximately $227.3 million since the initial suit but hasn’t yet repaid the debt in full.

In a new filing to the United States Bankruptcy Court, Genesis informed the court that DCG had agreed to pay its outstanding loans in exchange for forbearance by GGC with respect to the DCG parties’ obligations. Under the original agreement from September 16, DCG and DCGI had agreed to pay a total of $275 million in instalments. According to the amendments, they will pay an upfront payment of $35 million and continue payments on a monthly basis with loans fully paid by April 1, 2024. DCG is going to use Grayscale Trust shares as credit support to secure its obligations. If DCG fails to fulfil its obligation, Genesis will have the right to collect any unpaid amount.

The DCG-Genesis-Gemini-GBTC-Grayscale legal and financial troubles all started with the FTX collapse. We previously Observed that Genesis Global Capital had seriously suffered from the fallout and that another DCG subsidiary, Grayscale, had also experienced financial issues following the collapse. Genesis stopped redemptions for all clients in November last year, dragging cryptocurrency exchange Gemini Trust with it on the way down. In January this year, Genesis and two subsidiaries voluntarily filed for bankruptcy and stopped offering trading services.

Immediately prior to this, the U.S. SEC had charged both Genesis and Gemini for the unregistered offer and sale of securities. DCG proposed a new agreement plan for Genesis’s creditors this September, which implied the resolution of financial and legal issues between Genesis and Gemini. Recently, Genesis filed a complaint against cryptocurrency exchange Gemini to recover over half a billion dollars in preferential transfers. Meanwhile, the New York Attorney General has filed a lawsuit against Gemini, Genesis and DCG for defrauding more than 230,000 investors.

The total outstanding loan amount owed to Genesis is currently $324.5 million for DCG and 2,738 BTC for DCGI after all recent payments. While, according to the deal terms, Genesis won’t be paid in full, it will save time and assets by avoiding long and costly litigation. The creditors must first vote on the deal before it goes to the court for a final decision.