Controversial Repayment: Genesis Creditors Group Accuses Digital Currency Group Of Foul Play

Digital Currency Group (DCG) asserts full repayment to Genesis, yet creditors dispute, alleging substantial outstanding debt in court filings. The Southern District of New York Bankruptcy Court received claims from Genesis creditors denying DCG’s repayment status. Despite DCG’s assertion, these creditors insist there is considerable remaining debt to address in the ongoing legal proceedings.

Outstanding interest and overdue fees total $26 million, as communicated to the court by the creditors on Jan 8. Moreover, there arises a query regarding the payment method:

“Under the Partial Repayment Agreement, the DCG Entities are explicitly restricted from fulfilling their obligations in anything other than USD and BTC (Bitcoin). Specifically, the agreement prohibits using illiquid instruments that cannot be converted into cash or distributed to creditors to settle claims against the Debtors.”

The unconventional assets mentioned by the creditors were Grayscale Ethereum Classic Trust (ETCG) and Grayscale Ethereum Trust (ETHE), utilized as collateral. ETCG traded at a 69% discount to its net asset value in early Dec. Meanwhile, ETHE had a 50% discount. These funds lack approval from the United States Securities and Exchange Commission and are traded over the counter.

Genesis Loan Settlement Marks A Pivotal Step In DCG’s Financial Restructuring

Moreover, DCG, covering the purchase expenses, has facilitated the conversion of ETCG and ETHE shares into Bitcoin through monetization. Now, accurate accounting can be conducted, incorporating the creditors.

On Jan 8, the official committee of unsecured creditors released a statement regarding DCG’s partial repayment agreement, amended on Nov 28. According to the statement, DCG acknowledged an aggregate principal amount of 2,737.77102141 BTC and 14,048 Bitcoin Cash in loans. Additionally, late fees amounting to 10.12600241 BTC were disclosed in the agreement. The information highlights key details of DCG’s financial arrangement and obligations with the committee.

DCG made a distinctive move by settling its loans with Genesis on Jan 5. In Nov 2022, Genesis suspended withdrawals and sought Chapter 11 bankruptcy protection in Jan 2023.

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