Genesis Global Capital sues DCG and DCGI for $600 million

Author: Nikhilesh De, CoinDesk; Compiler: Songxue, Jinse Finance

Genesis Global Capital filed a lawsuit against Digital Currency Group (DCG) and Digital Currency Group International (DCGI), seeking repayment of multiple loans with principal amounts exceeding $600 million.

DCG borrowed as much as $500 million in four different loans from Genesis in 2022, while DCGI borrowed 18,697.7 BTC in 2019, the two filings on Thursday said. DCG and Genesis entered into a master loan agreement on November 10 last year, with each loan agreement's 2022 loan having an extended or normal maturity date of May 9 or 10, 2023. DCGI entered into a master loan agreement with Genesis on June 21, 2019, with a similar 2023 extended maturity date. Genesis and DCGI are both subsidiaries of DCG, the parent company of CoinDesk.

Genesis, which filed for bankruptcy in January, said in a filing on Wednesday that DCG and DCGI "wrongfully took possession" of bankruptcy property belonging to Genesis Global Capital. The loans were all due and payable in May of this year, but DCG appears to want to convert the loans to "open loans," sending a notice to Genesis on May 9, the filing said. However, the former crypto lender claimed that Genesis did not agree to the switch and reserved the right to seek recourse.

"DCG's May 9 wire instruction requesting repayment of the loan at 10:37 p.m. ET on May 9, 2023, did not constitute a 'timely' request as contemplated in the MLA," DCG's filing states. “Because Article II (c) (i) of the DCG MLA provides that upon DCG’s request for wire transfer instructions, GGC shall provide them no later than the day before the maturity date of a given loan, the May 9 DCG request does not constitute timely notification with respect to the May 9 Loan or the May 10 Loan (given that the request was made on the May 9 loan due date, not before). And on the May 10 Loan Sent 90 minutes before midnight on the day before the expiration date).

Two documents said that as of Wednesday, DCG owed Genesis $500 million, while DCGI owed 4,550.5 BTC (worth approximately $117 million at press time). Genesis is also seeking late fees and accrued interest, calling the funds "property that the debtor can use in its ongoing bankruptcy case."

A DCG spokesperson said in a statement: "Genesis has agreed to a stay of action to allow us to continue recording the agreement in principle with Genesis, UCC and DCG. We are recording a stay agreement and expect to file it with the court as soon as possible. At that time, we will initiate capital distributions and continue to achieve significant recoveries for Genesis creditors."