The Digital Currency Group has been burning with subsidiaries of more than $ 1.1B promissory notes
The Venture Capital Firm Digital Currency Group (DCG), the parent company of many creatures tied to cryptocurrency and blockchain, filed a complaint against two of its subsidiaries in a promissory note to guard against the 2022 default of three arrows (3ac).
On a Thursday filed in the US bankruptcy court for the Southern District of New York, the DCG said the Genesis Global Capital and Genesis Asia Pacific, both under the venture capital firm, owed their parent’s overpayment based on recovery from 3ac.
The complaint said the DCG has released a $ 1.1 billion promissory note in the Genesis entities, confirmed by the “hundred -millions of dollars” without suffering any loss from 3AC default in 2022.
According to the DCG, the company released a 10-year promissory note in the Genesis Global Capital in June 2022 as a precaution against any potential “hole” in the equity of Genesis Asia Pacific that could have caused the collapse of 3ac, one of the genesses in Genesis. The DCG has accused that instead of dealing with significant liquidity problems from 3ac, the Genesis “Reap (ED) a massive windfall” and obliged to return payments made in the promissory record.
The recent complaint is the latest legal seizure between DCG and Genesis in the fall of 3ac. In May, Genesis filed suits against the parent company, affiliated and CEO Barry Silbert, who expresses fraud, insider enrichment and hidden transfer. The company Ask for $ 3.3 billion in DCG It is said that the funding is removed before the losses of Genesis.
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The $ 1.1-billion promissory note mentioned in the filing was issued in response to the collapse of 3AC, with Genesis potentially facing a deficiency in its equity for the second quarter of 2022.
However, the DCG noted that “cryptocurrency prices eventually recovered,” allowing Genesis to use 3AC collateral – Grayscale’s Bitcoin trust sharing, which increased the amount of cryptocurrency price – to earn from loans.
“(T) the increases of his value realized by Genesis after the issuance of the note were, based on the requests filed by Genesis in this court seeking the approvement of that transaction, more than enough to overcome the previous $ 1.1 billion collateral deficiency -and, in information and beliefs, allowed the original $ 2.36 billion in (3ac).
FTX collapse was caught in the mix
The 2022 crypto market crash, suggested by many experts influenced by the collapse of the Terra ecosystem, which resulted in many losses and liquidity issues, with many retail investors losing millions. In the midst of market uncertainty, FTX, one of the largest cryptocurrency exchanges at that time, filed for losses, and some of its executives were accused of fraud.
“While the (Genesis Global Capital’s) Direct credit exposure to FTX was immaterial, FTX losses avoided the equivalent of a tsunami in the world of losses on January 19, 2023 due to ‘Run in the Bank’ that occurred in November 2022 and caused the removal of Genesis,”
“Although (3AC) was no longer -default in June 2022, (the Genesis Global Capital) would not have enough capital to withstand the unexpected and devastating market route that followed the FTX’s collapse in November 2022, which also led to the crypto lender blockfi to file for chapter 11 bankruptcy in the same month.”
After filming losses in Genesis, the company Completed the repair of the plan In August 2024 and announced and the dissolution of nearly $ 4 billion funds among the affected parties. The DCG asked the court’s order that Genesis would pay more than $ 105 million with interest.
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