Bankrupt Genesis Global Claims Digital Currency Group Failed to Repay Its Debts

Blockworks reported that an ad hoc group of lenders accused Digital Currency Group (DCG) of failing to repay its bankrupt subsidiary Genesis Global. The lenders claimed that DCG still had to pay back large amounts of USD and BTC to the debtors and their creditors, despite DCG’s announcement that it had cleared its short-term loans from Genesis. Genesis and other debtors also said that DCG owed them an unknown quantity of bitcoin, along with $26 million in interest and late fees, as per their repayment and master loan agreements.

To meet its BTC obligations, DCG allegedly transferred about $189 million in US dollars and gave up some ETHE and ETCG shares. These shares belonged to the Grayscale Ethereum Classic Trust and the Grayscale Ethereum Trust, and served as collateral for DCG’s loans from Genesis. However, DCG could only use USD and BTC to settle its debts, not other assets, according to a partial repayment agreement from September.

Genesis had to sell the ETHE and ETCG shares and buy bitcoin with the money to figure out how much bitcoin DCG still owed them. DCG would have to cover the costs of this process. In September, Genesis took DCG to court to recover more than $700 million in cash and cryptocurrencies that were due in May 2023. According to court documents from September, DCG’s total debt to Genesis and other creditors was over $1.7 billion. Genesis said that DCG had not paid 4,550 BTC, worth around $214 million, and 14,048 bitcoin cash, worth about $3.5 million, as well as 70 bitcoin in late fees. DCG has not commented on Blockworks’ inquiry.