Genesis, a bankrupt crypto lender, and its parent company, Digital Currency Group (DCG), have entered into a repayment agreement that could potentially bring an end to a protracted legal dispute. The agreement, outlined in a filing to the United States Bankruptcy Court for the Southern District of New York on Nov. 28, stipulates that DCG will settle its outstanding $324.5 million in loans to Genesis by April 2024.
Lawsuit and Repayment Stakes
Genesis had filed a lawsuit against DCG in September, seeking to recover approximately $620 million in overdue loans. The proposed deal not only addresses the outstanding loans but also allows Genesis to pursue any unpaid amounts. The repayment agreement is poised to provide Genesis with “immediate significant and near-term benefits,” steering clear of the potential risks, expenses, and resource diversion associated with prolonged litigation.
The agreement is a strategic move for Genesis as it navigates its bankruptcy proceedings. With the looming specter of litigation lifted, Genesis can now focus on its broader plans to repay creditors. The proposed repayment deal, crucial to the company’s restructuring efforts, will be subject to a vote by creditors before being presented to Judge Sean Lean for final approval. The company is optimistic that this resolution will streamline its path to financial recovery.
Broader Legal Landscape: Gemini Lawsuit and SEC Allegations
Adding complexity to Genesis’s legal challenges, the company filed a lawsuit against crypto exchange Gemini on Nov. 22, seeking to recover nearly $670 million in transfers. Moreover, both Genesis and Gemini are currently entangled in a lawsuit with the U.S. Securities and Exchange Commission (SEC), which alleges the sale of unregistered securities. In a separate legal action, the state of New York has sued Genesis, Gemini, and DCG, accusing them of defrauding investors.