Genesis Global Capital filed a suit against Digital Currency Group (DCG) and Digital Currency Group International (DCGI), seeking the repayment of multiple loans with a principal amount of over $600 million.
The pair of filings on Thursday allege that DCG borrowed up to $500 million across four different loans from Genesis in 2022, while DCGI borrowed 18,697.7 BTC in 2019. DCG and Genesis entered into master loan agreements on Nov. 10 last year, and each of these 2022 loans had an extended or normal maturity date of May 9 or 10, 2023. DCGI entered into a master loan agreement with Genesis on June 21, 2019, with a similar 2023 extended maturity date. Genesis and DCGI are both subsidiaries of DCG, which is also CoinDesk's parent company.
Genesis, which filed for bankruptcy in January this year, alleged in its Wednesday filings that DCG and DCGI are "wrongfully in possession of property" belonging to Genesis Global Capital's bankruptcy estate.
Each of these loans matured and are payable as of this past May, the filings said, but DCG appeared to want to convert the loans into "Open Loans," sending notifications to Genesis on May 9. However, the onetime crypto lender alleges, Genesis did not agree to this conversion, and reserved its rights to be repaid.
"The May 9 DCG Request for wire instructions for repayment of the Loans at 10:37 p.m. (ET) on May 9, 2023 does not constitute a 'timely' request as contemplated in the MLA," the DCG filing said. "Because Section II(c)(i) of the DCG MLA contemplates that, following DCG’s request for wire instructions, GGC shall provide the wire instructions no later than the day prior to the Maturity Date of a given Loan, the May 9 DCG Request cannot constitute timely notice with respect to the May 9 Loan or the May 10 Loan (given that it was sent on, not before, the Maturity Date for the May 9 Loan, and was sent approximately 90 minutes before midnight on the day prior to the Maturity Date for the May 10 Loan)."
As of Wednesday, DCG owed Genesis $500 million, while DCGI owed 4,550.5 BTC (worth about $117 million as of press time), the two filings said. Genesis is also looking for late fees and accrued interest, saying these funds are "property that the debtor could use" in its ongoing bankruptcy case.
In a statement, a DCG spokesperson said, "Genesis has agreed to stay the turnover action so that we can move forward with documenting the deal in principle that was reached with Genesis, the UCC, and DCG. 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."
UPDATE (Sept. 6, 2023, 19:50 UTC): Adds DCG statement.
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