Genesis Reaches Settlement With Parent Firm DCG in $620M Lawsuit
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The embattled cryptocurrency lender, Genesis, and its parent company, Digital Currency Group (DCG), have reached a settlement that could end the lengthy lawsuit seeking the recovery of $620 million in repayments from DCG.
$227.3M Paid to Genesis With a $324.5 Balance Due By April 2024
In September, Genesis initially filed a lawsuit against DCG, alleging wrongful possession of over $620 million in loans and seeking repayment, generated interest, and fees. So far, DCG has already settled a substantial portion of the debt, approximately $227.3 million.
In a November 28 filing to a New York Bankruptcy Court, DCG has committed to settling the outstanding $324.5 million in installments to Genesis on or before April 2024.
This includes a payment of $275 million in three installments, to be partly disbursed in both US dollars and Bitcoin, and an upfront payment of $35 million.
Additionally, the firm will also pay a $10 million holdback tied to the CoinDesk sale proceeds, aligning with the terms of the Original Partial Repayment Agreement.
Lawsuit Background:
Genesis Global filed a lawsuit against Digital Currency Group (DCG) in September, accusing DCG of wrongfully possessing over $620 million in loans during Genesis' bankruptcy proceedings.Repayment Plan:
DCG has paid around $227.3 million of the $620 million…— Đông QN (@dongqn69) November 29, 2023
Furthermore, DCG will pledge certain shares from Grayscale Ethereum Trust and Grayscale Ethereum Classic Trust to secure the agreement. This obligation likely stems from past missed repayments by Genesis’ parent company.
In return for these pledged assets, Genesis agrees to refrain from taking action on prior consent judgments unless DCG defaults on the terms of the agreement. This arrangement involves collateralizing assets by DCG to ensure compliance and serves as a precaution against potential defaults.
Although the payment agreement doesn’t fully clear DCG’s outstanding debt of $324.5 million owed to Genesis, it provides a resolution that avoids prolonged and expensive legal proceedings.
Nevertheless, the latest agreement still requires final approval from US Judge Sean Lean before repayment is set in motion.
If approved, the settlement showcases the commitment of both entities to reach a mutual resolution, steering clear of recurring legal disputes. The inclusion of cryptocurrency, particularly bitcoin, as part of the payment underscores the increasing acknowledgment and adoption of digital assets within the financial sector.
Fresh $175M Repayment Plan to FTX Looms
While the unfortunate chapter of the bankruptcy dealings edges to a final resolution, DCG and its subsidiary, Genesis, have to deal with other lawsuits, notably a $175M settlement plan to defunct FTX.
The US Bankruptcy Court for the Southern District of New York has ordered Genesis to make the settlement payment to Alameda Research, an entity affiliated with FTX.
GENESIS TO PAY $175M SETTLEMENT TO FTX – APPROVED BY COURT, EXPUNGING BILLIONS IN CLAIMS
A New York bankruptcy judge approved a $175 million settlement between cryptocurrency firms FTX and Genesis Global Trading. The approval allows Alameda Research, affiliated with FTX, to… pic.twitter.com/6eFdXexH3c
— The Wolf Of All Streets (@scottmelker) October 12, 2023
This development unfolds amidst the ongoing trial of Sam Bankman-Fried (SBF), which revealed the inner workings of FTX and Alameda, including misappropriated funds and financial malpractices.
The approved settlement signifies a substantial reduction from the initial claim made by FTX debtors in May 2023, amounting to approximately $3.9 billion. The original claims encompassed various allegations, such as $1.8 billion asserted as loan repayments owed by Alameda to Genesis and $1.6 billion representing assets allegedly withdrawn by Genesis debtors from FTX.
Genesis’ legal representatives have characterized the settlement as “fair and equitable,” emphasizing its potential to expedite repayment without incurring the expenses of protracted litigation.