BlockBeats News, August 15th, according to The Block, global investment firm Digital Currency Group (DCG) is suing its subsidiary Genesis Global Capital LLC, as DCG provided an $1.1 billion guarantee to support the now-bankrupt Genesis during the last cryptocurrency market crash.
According to the complaint filed by DCG in the Southern District of New York bankruptcy court, the company attempted to bridge a potential "gap" through this $1.1 billion promissory note, which was a measure taken in response to the 2022 cryptocurrency hedge fund collapse involving Three Arrows Capital. DCG noted that Three Arrows Capital was one of Genesis's largest borrowers.
DCG stated that Three Arrows Capital failed to meet Genesis's margin call in 2022, resulting in a $2.36 billion default, creating a GAP book equity deficit. DCG voluntarily provided $1.1 billion promissory note support to its subsidiary Genesis. Subsequently, as cryptocurrency prices recovered, the profits obtained by Genesis from the collateral far exceeded the principal of the note, automatically offsetting the corresponding amount.
DCG is requesting the court to order Genesis Global Capital to pay it over $105 million plus interest.
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