Digital Currency Group [DCG] and its bankrupt subsidiary Genesis Global have reportedly reached a settlement agreement to address their legal dispute, as indicated by a recent filing. In early September, the crypto brokerage firm initiated a lawsuit against DCG, accusing them of wrongfully holding more than $620 million in loans during Genesis’ bankruptcy proceedings and seeking repayment along with interest and fees. Up to this point, DCG has made payments totaling more than $220 million out of the $620 million owed.
The settlement terms entail DCG making an additional payment of $275 million to the crypto broker in three installments, partly in U.S. dollars and bitcoin, with the final installment due by April. The agreement also includes an upfront payment of $35 million and a $10 million holdback from the recent sale of CoinDesk. According to the filing, DCG is using Grayscale Trust shares as collateral.
While the settlement won’t fully satisfy the debt, as DCG’s total owed amount stands at $324.5 million, it is designed to prevent protracted and costly legal proceedings between the two entities. The plan could result in a 70%–90% recovery for unsecured creditors. However, the approval of creditors is still required for the deal to proceed.
Genesis Clash With DCG
As mentioned earlier, Genesis Global Capital had filed a lawsuit against its parent firm Digital Currency Group, and Digital Currency Group International [DCGI], seeking repayment of multiple loans. The legal filings made public in early September alleged that DCG borrowed up to $500 million across four loans from Genesis in 2022, and DCGI borrowed 18,697.7 BTC in 2019.
Both the warring parties entered into master loan agreements in November of the previous year, with extended or normal maturity dates in May 2023. DCGI, a subsidiary of DCG, also entered into a master loan agreement with Genesis in 2019. Genesis, having filed for bankruptcy in January, contends that DCG and DCGI are in wrongful possession of property belonging to Genesis Global Capital’s bankruptcy estate, according to the filings made on Wednesday.