Digital Currency Group (DCG) has filed a lawsuit against its bankrupt lending subsidiary Genesis Global Capital in the U.S. Bankruptcy Court for the Southern District of New York, seeking more than $105 million plus interest. The dispute centers on a $1.1 billion promissory note DCG issued in 2022 to stabilize Genesis after crypto hedge fund Three Arrows Capital (3AC) defaulted on a $2.36 billion margin call.
DCG claims the voluntary note addressed a financial "hole" in Genesis Asia Pacific caused by 3AC's collapse. The parent company contends that subsequent gains from 3AC-linked collateral (termed "TAC Recoveries") have more than offset the principal, leaving $105 million outstanding. A DCG spokesperson stated: "We have consistently met our contractual obligations under that note, but believe those have now been fully satisfied."
Genesis' legal team, led by Cleary Gottlieb partner Luke Barefoot, rejected the claim as "unfounded, haphazard and convenient," arguing DCG's position contradicts written agreements, prior court statements, and its own distributions of over $100 million. This lawsuit escalates existing legal battles between the entities, including Genesis' May 2025 suit against DCG and CEO Barry Silbert seeking $3.3 billion for alleged wrongful fund diversions.
The conflict stems from Genesis' 2023 bankruptcy filing following the TerraUSD and FTX collapses. After restructuring and distributing $4 billion to creditors in 2024, DCG—as an equity holder—remains last in repayment priority. Unsealed June court documents revealed DCG allegedly ignored internal risk warnings about Genesis' financial controls as early as 2020.