Tensions have arisen as Genesis Global Capital (GGC), a New York-based subsidiary of Digital Currency Group (DCG), filed legal actions against DCG and its international arm, DCGI, with a mission to retrieve unpaid loans totaling around $600 million. GGC, which was declared bankrupt early this year, asserts that DCG and DCGI are wrongfully holding properties that should be part of GGC’s bankruptcy estate.
In the heart of the argument, about $620 million in unsettled loans, collected by DCG and DCGI, that were due in May, comprising approximately 4,550 Bitcoin, are being alleged. GGC, now entangled in its ongoing bankruptcy case with a massive $3.5 billion debt to its top 50 creditors, advocates for full loan repayment along with interest and late fees.
DCG, as the parent company of GGC and DCGI, has previously secured loans from Genesis, amounting to $500 million distributed across four instances in 2022. Yet the pivotal twist comes with DCG’s and DCGI’s attempt to convert these loans to open loans, an action that GGC does not consent to. Consequently, the debts remain unreturned, leading GGC to pivot towards the courts for resolution.
In an unexpected turn, both parties have agreed to pause the legal actions. A spokesperson for DCG has commented, “We are documenting a forbearance agreement and expect to file it with the court shortly. At that point, we will initiate the distribution of funds and continue on the path to significant recovery for Genesis creditors.”
Furthermore, DCG has reached a preliminary agreement on August 29 with unsecured creditors of GGC, proposing to repay them 70–90% of the due amounts. Nevertheless, it’s noteworthy to mention that the agreement was not endorsed by the ad hoc creditors’ committee and the cryptocurrency exchange Gemini.
In more recent news on September 5, Genesis Global Trading, a company linked to Genesis, has decided to cease its spot crypto trading services by September 18 due to unspecified business considerations. This only adds to the uncertainty shrouding the future of this saga as crypto regulation continues to evolve.
Source: Cryptonews
