Crypto Loan Conflict: Genesis Demands $600 Million Payment from Digital Currency Group

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A heated dispute in the glow of digital screens in a bank vault filled with stacks of digital currencies. A looming figure, holding a document titled 'lawsuit', emphatically points toward a clock illustrating the late hour, underlining the urgency. Slightly surreal cubist style, muted but tense blue and grey tones, creating an atmosphere of high-stakes financial drama.

In an undeniable twist of the regulatory tangle, Genesis Global Capital has launched a legal salvo against Digital Currency Group (DCG) and its international counterpart (DCGI) over alleged outstanding loans. The paper trail reveals an aggregate principle exceeding $600 million, according to the lawsuits filed last Thursday.

Genesis claimed that throughout 2022, DCG borrowed four separate times, totalling up to $500 million. Meanwhile, DCGI is said to have borrowed 18,697.7 BTC in 2019. The master loan agreements between DCG and Genesis, as well DCGI and Genesis, stipulated a normal or extended maturity date spanning May 9 and 10, 2023.

Genesis, a subsidiary of DCG, filed for bankruptcy in January, amidst claims that both DCG and DCGI were “wrongfully in possession of property” pertaining to the former’s bankruptcy estate. Uncannily, DCG also happens to be CoinDesk’s parent company.

Repayment was due this May as per the maturation of the loans, according to court filings. But, Genesis contends that DCG sought to morph the credit into “Open Loans”, triggers that were said to be sent on May 9. Genesis was quick to point out that it had not acquiesced to such a metamorphosis and insisted that its rights to be repaid remain unharmed.

Underlining the intricate timing of the loans and requests, Genesis stated that DCG’s request for loan repayment, sent at 10:37 p.m. on the maturity date, was not ‘timely’, as per the loan agreement. Given the requirement stipulated in the master loan agreement, that DCG’s request for repayment should precede the maturity date, Genesis considered the loan request ill-timed.

On Wednesday, DCG found itself staring at $500 million owed to Genesis. Add to that, DCGI’s debt of 4,550.5 BTC (approximately $117 million at the time). Genesis further deepened its demand by calling for late charges and accumulated interest, labelling these as “property that the debtor could use” considering its ongoing bankruptcy proceedings.

DCG has not commented on Genesis’ allegations yet. This scenario yet again underlines the complexity of crypto-related loan agreements, showcasing the need for precise clarity in terms and conditions. Will the regulatory tendency sway towards more explicit guidelines in the future? Only time can tell.

Source: Coindesk

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