DCG Once Provided $1.1 Billion Guarantee, Now Sues Subsidiary Genesis for Over $105 Million in Claims

BlockBeats News, August 15—According to The Block, global investment firm Digital Currency Group (DCG) is suing its subsidiary Genesis Global Capital LLC over an $1.1 billion promissory note DCG provided to support the now-bankrupt Genesis during the last cryptocurrency crash.

In a complaint filed in the U.S. Bankruptcy Court for the Southern District of New York, DCG stated that the $1.1 billion note was intended to fill a potential “gap” following the collapse of crypto hedge fund Three Arrows Capital in 2022. DCG noted that Three Arrows Capital was one of Genesis’s largest borrowers.

DCG explained that Three Arrows Capital failed to meet Genesis’s margin calls in 2022, resulting in a $2.36 billion default and creating a gap in Genesis’s equity. DCG voluntarily provided the $1.1 billion promissory note to support its subsidiary Genesis. As cryptocurrency prices later rebounded, Genesis’s returns from collateral far exceeded the principal of the note, which was automatically offset by the corresponding amount.

DCG is asking the court to order Genesis Global Capital to pay it more than $105 million plus interest.