Bitcoin News Today: DCG Sues Genesis for $105M Over $2.8B 3AC Asset Recovery

Digital Currency Group (DCG) has filed a lawsuit in the U.S. Bankruptcy Court for the Southern District of New York, seeking over $105 million in repayment from its former subsidiary, Genesis Global Capital, related to a $1.1 billion promissory note issued in June 2022. The note was established to mitigate potential losses following the collapse of Three Arrows Capital (3AC), a major crypto hedge fund. DCG claims that Genesis has since recovered over $2.8 billion in collateral from 3AC-related assets, rendering the original financial support unnecessary and obligating Genesis to return the funds [1].

The legal action underscores the deteriorating relationship between DCG and Genesis, which once operated in close coordination. DCG asserts that the promissory note was a temporary stabilization measure to protect account holders and maintain Genesis’s solvency. The company argues that retaining the $105 million would improperly position DCG as a creditor in the bankruptcy process, contradicting the original intent of the agreement [2].

In response, Genesis has filed a counter-suit, seeking the return of over $3.1 billion in assets and challenging the validity of the note. The subsidiary claims that it has not benefited from an undue windfall and that the collateral recovered justifies its financial standing. The counterclaim highlights the complexity of intercompany financial obligations in the crypto sector, where traditional bankruptcy norms are being tested in the context of digital assets [3].

Legal experts suggest that the case could set a precedent for handling similar disputes following high-profile crypto failures, such as those involving FTX and Terra-LUNA. The outcome may influence how courts interpret asset recovery and allocation in crypto-related bankruptcies, particularly regarding the role of parent companies in restructuring efforts [4]. Unlike previous crypto collapses, this case has not yet involved the liquidation of major assets held by Genesis, though the prolonged legal battle is likely to affect creditor expectations and market sentiment.

Despite the high stakes, the market response has been relatively muted. Cryptocurrency prices, including Bitcoin (BTC) and Ethereum (ETH), have shown minimal immediate impact. As of August 16, 2025, Bitcoin was trading at $117,420.28, with a market cap exceeding $2.34 trillion. While BTC saw 12.80% growth over 90 days, trading volumes have declined, reflecting increased caution among market participants amid ongoing legal uncertainties [5].

The case remains a focal point for the broader crypto sector, as stakeholders observe how traditional financial and legal frameworks are applied to digital assets. DCG continues to emphasize that the promissory note was not intended as a permanent financial transfer, while Genesis maintains that the funds were necessary and not subject to repayment under current circumstances [5].

Source:

[1] DCG Sues Genesis Over $105M Promissory Note Amid $2.8B ... (https://www.ainvest.com/news/dcg-sues-genesis-105m-promissory-note-2-8b-asset-recovery-2508/)