The Genesis Global Capital Bankruptcy Case and Unpaid Loans
In January this year, Genesis Global Capital (GGC) filed for bankruptcy after a significant reduction in its workforce. Recently, GGC accused Digital Currency Group (DCG) and Digital Currency Group Inc. (DCGI) of wrongfully possessing property that rightfully belongs to GGC’s bankruptcy estate. In a case filed in September, GGC alleges that DCG and DCGI have not repaid multiple loans totaling around $620 million, including approximately 4,550 Bitcoin. GGC is demanding full loan repayment, including interest and late fees, as these funds could be used to address GGC’s ongoing bankruptcy case.
In 2022, DCG and DCGI received loans from GGC amounting to $500 million in total. Additionally, DCGI borrowed 18,697.7 BTC in June 2022. Despite partial repayment, a balance of 4,550.5 BTC remains unpaid. Master loan agreements were established between DCG, Genesis, and DCGI, with maturity dates set for May 9 or 10, 2023.
Agreement Reached to Halt Lawsuit Over Loan Conversion Disagreement
DCG expressed its intention to convert the loans to open loans on May 9, which GGC did not agree with. DCGI also requested the debt to be reverted to an open loan, facing opposition from GGC. However, the lawsuit will not proceed to judgment as an agreement has been reached. DCG and GGC are working on documenting a deal in principle, including a forbearance agreement. Once filed with the court, the distribution of funds will begin, benefitting Genesis creditors in their path to recovery.
On August 29, DCG tentatively reached an agreement with unsecured creditors of GGC to reimburse them with 70–90% of the owed dollar equivalents. It’s important to note that this agreement did not receive endorsement from the ad hoc creditors’ committee and the cryptocurrency exchange Gemini.
Additionally, on September 5, Genesis Global Trading, a company associated with Genesis, announced its voluntary decision to wind down its spot crypto trading service due to undisclosed business considerations.
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