Digital Currency Group Sues Genesis for Profiting After Collapse
Digital Currency Group (DCG) has filed a lawsuit against its subsidiary Genesis, alleging that the collapsed crypto lender has actually made profits in the long-term following its collapse and subsequent bailout.
Genesis Receives $1.1 Billion Loan from DCG
In the lawsuit filed on Thursday, DCG claimed that the $1.1 billion loan it provided to Genesis in 2022 was more than sufficient to cover its losses.
Genesis Goes Bankrupt Amid Crypto Contagion
Genesis, a crypto lender, went bankrupt in 2023 after lending money to collapsed crypto firm Three Arrows Capital and other firms during the bear market and “crypto contagion” that swept through the industry in 2022.
DCG Steps in to Repay Genesis Customers
DCG intervened with capital to help repay Genesis customers. However, in the recent lawsuit, DCG argued that the rise in the value of recovered collateral from Three Arrows Capital has reduced its obligations under the promissory note to zero.
Genesis Profits from Crypto Assets Appreciation
The lawsuit claims that Genesis has actually profited by hundreds of millions of dollars due to the appreciation in value of assets from Three Arrows Capital, which were in Bitcoin and Grayscale Bitcoin Trust shares that surged in value since 2022.
Genesis Faces Lawsuit from DCG
In response to Genesis suing DCG in May, alleging fraudulent transfers by its parent company and CEO Barry Silbert during the lender’s collapse in 2022, DCG has now filed a lawsuit seeking $3.1 billion in damages.
For more information, Decrypt reached out to DCG for comment but did not receive an immediate response.
Genesis, a crypto lending platform affiliated with DCG, allowed users to earn interest on their crypto holdings by lending them out to others.
During the market turmoil caused by the collapse of Terra and other events in the crypto industry, Genesis made billions of dollars in loans to struggling firms like Three Arrows Capital and Alameda Research.
With ongoing legal battles between DCG and Genesis, the future of the once-promising crypto lender remains uncertain as the industry continues to navigate challenges and controversies.