An ad hoc group of lenders associated with bankrupt Genesis alleged that Digital Currency Group has yet to fulfill its loan repayment requirements with the defunct lender because it still owes substantial amounts in both Bitcoin and US Dollars, according to a Jan. 8 court filing.
On Jan. 5, DCG publicly claimed it had disbursed over $1 billion to creditors within a year, including $700 million directed to Genesis to cover all immediate obligations.
Why DCG is still allegedly indebted to Genesis
The ad hoc group disputed the crypto asset management firm’s claims, saying that “DCG Entities have not satisfied their obligations…and continue to owe the Debtors’ estates and their creditors significant sums of USD and BTC.”
The Genesis lenders’ group claimed that DCG had transferred only $189 million in cash and surrendered portions of its holdings in illiquid Grayscale Ethereum Classic Trust (ETCG) and Grayscale Ethereum Trust (ETHE) “purportedly in satisfaction of the DCG entities’ BTC obligations.”
However, the group, citing the partial repayment agreement between both companies, pointed out that DCG can only fulfill its USD and BTC commitments solely through these currencies, excluding other assets.
Therefore, DCG’s outstanding BTC obligations remain uncertain until Genesis liquidates the ETCG and ETHE shares to procure BTC.
Furthermore, the lenders noted that DCG entities are subject to an extra $26 million in interest and late fees for the USD component of the loans, as stipulated in the loan agreements between the two parties.
“The DCG Entities remain obligated to the Debtors for in excess of $26,000,000.00 for interest and late fees owed on account of the USD Portion of DCG’s obligations pursuant to the respective master loan agreements giving rise to such obligations,” the ad hoc group wrote.
In September, Genesis initiated legal action against its parent company to reclaim an outstanding loan worth over $700 million, consisting of cash and cryptocurrencies due for repayment by May 2023. The court documents further revealed that DCG owed Genesis and various other creditors more than $1.7 billion.
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