Digital Currency Group Sues Genesis Over $1.1 Billion Promissory Note Linked to 3AC Collapse
Digital Currency Group (DCG), a prominent conglomerate in the cryptocurrency sector, has initiated legal proceedings against its own lending subsidiary, Genesis Global Capital. The lawsuit centers on a substantial $1.1 billion promissory note, originally issued in 2022. This internal legal battle stems directly from the financial fallout of the catastrophic collapse of crypto hedge fund Three Arrows Capital (3AC), highlighting the persistent reverberations of past market turmoils within the digital asset ecosystem.
The Core of the Dispute
The $1.1 billion promissory note in question was issued by DCG to Genesis as a mechanism to help the lending firm navigate the immense liquidity crisis triggered by 3AC's insolvency. Genesis, a major crypto lender, suffered significant losses due to its exposure to 3AC. The note represented an attempt to shore up Genesis's balance sheet and provide financial stability during a period of extreme market stress.
This legal action by DCG against its subsidiary marks a significant development in the ongoing saga of Genesis's financial restructuring. While the note was initially intended as support, DCG's lawsuit now seeks to formally establish its claim over this debt, particularly as Genesis has undergone bankruptcy proceedings. The move is a strategic step for DCG to recover funds or formalize its position as a major creditor amidst Genesis's efforts to repay its extensive list of creditors.