Parent Company Demands Repayment Amid 3AC Collapse Aftermath

Digital Currency Group (DCG) has escalated its legal battle with bankrupt subsidiary Genesis Global Capital, filing a complaint in New York bankruptcy court seeking repayment of over $105 million from a $1.1 billion promissory note issued during the 2022 crypto market crash. The dispute centers on collateral recovery from failed hedge fund Three Arrows Capital (3AC), with DCG alleging Genesis improperly retained windfall profits while using DCG's financial backing as insurance.

Promissory Note Becomes Legal Flashpoint

Court documents reveal DCG issued the decade-long note in June 2022 as emergency liquidity support after 3AC's collapse created potential 【$1.1 billion】 shortfall in Genesis Asia Pacific's equity. However, DCG contends cryptocurrency market recovery allowed Genesis to reclaim nearly 【$2.8 billion】 from original $2.36 billion in 3AC loans through collateralized Grayscale Bitcoin Trust shares — far exceeding the anticipated deficit.

——"Genesis reaped hundreds of millions in profits while DCG bore the risk," the filing states, claiming subsidiaries violated repayment agreements——

Bankruptcy Court Becomes Crypto Feud Arena

This marks the latest chapter in complex litigation between the entities. Genesis previously sued DCG in May 2025 alleging $3.3 billion in fraudulent transfers prior to its January 2023 bankruptcy filing. Genesis counsel Luke Barefoot dismissed DCG's new claims as "meritless," noting $100+ million had already been returned per existing agreements.

The case underscores lingering financial tremors from 2022's crypto winter, when Terra's collapse and FTX's bankruptcy created cascading defaults. While Genesis survived 3AC's downfall, DCG argues the subsequent FTX "tsunami" would have triggered Genesis' insolvency regardless — making the promissory note repayments unjust enrichment.

Restructured Genesis Faces New Financial Demands

Having emerged from bankruptcy in August 2024 after distributing 【$4 billion】 to creditors, Genesis now confronts DCG's demand for full repayment plus interest. The outcome could set precedents for parent-subsidiary liabilities in crypto bankruptcies, particularly regarding collateral valuation timing and windfall profit distribution.