Digital Currency Group (DCG) has filed a lawsuit against its bankrupt subsidiary, Genesis Global Capital, seeking over $105 million in relation to debentures.
DCG's Lawsuit Against Genesis
DCG filed its complaint on Thursday in the U.S. Bankruptcy Court in the Southern District of New York. In the lawsuit, it claimed that it had attempted to fix a potential 'hole' after the collapse of crypto hedge fund Three Arrows Capital, which was one of Genesis’s largest borrowers, via the $1.1 billion promissory note. According to the lawsuit, Three Arrows did not satisfy a margin call by Genesis in 2022, which led to a $2.36 billion default.
Genesis's Challenges and Consequences
However, later, crypto prices recovered and Genesis allegedly recorded 'massive gains' from the TAC Collateral. The lawsuit claims that Genesis realized gains on the TAC Collateral subsequent to the issuance of the Note, exceeding its initial $1.1 billion Principal Amount. As a result, DCG now wants Genesis Global Capital to pay over $105 million plus interest.
Genesis's Counteractions Against DCG
Genesis Global Capital has also filed a lawsuit against its parent company, DCG, and its CEO Barry Silbert, alleging fraud and mismanagement amounting to $3.1 billion. The lawsuit alleges that DCG mismanaged funds and engaged in fraudulent activities, accusing Silbert of improper transfers exceeding $1 billion while insolvent.
The legal disputes between Digital Currency Group and Genesis Global Capital continue to escalate amidst the financial turmoil affecting both companies following downturns in the cryptocurrency market.
