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Digital Currency Group Takes Legal Action Against Genesis Over Loan Dispute

Digital Currency Group (DCG) has filed a lawsuit against its subsidiary Genesis, contesting the repayment of a $1.1 billion loan extended in 2022.

DCG alleges that Genesis has ultimately profited from its financial troubles despite its bankruptcy in 2023, which was influenced by loans to distressed firms like Three Arrows Capital.

Following an industry-wide bear market and contagion, DCG previously provided capital to help Genesis fulfill customer withdrawals.

However, the latest lawsuit argues that the recovery of collateral from Three Arrows Capital, primarily in Bitcoin and shares of Grayscale Bitcoin Trust, has significantly increased since the loan was made.

Due to this appreciation, DCG contends that its obligations under the promissory note have effectively diminished to zero.

The lawsuit states, “Genesis ultimately suffered no loss from TAC's default; rather Genesis has profited by hundreds of millions of dollars.”

This lawsuit comes on the heels of Genesis's own legal action against DCG, which is seeking $3.1 billion for alleged fraudulent transfers made during its financial collapse.

With the crypto landscape dramatically shifting, the implications of this lawsuit could hold substantial significance for both companies and their stakeholders.

As the situation unfolds, it highlights the complex legal and financial dynamics within the cryptocurrency space.

Both companies are likely to face increased scrutiny as they navigate their respective claims in this controversial case.