DCG Sues Genesis for $1.1 Billion Promissory Note Repayment Over 3AC Collapse

Digital Currency Group (DCG) has initiated legal action in the U.S. Bankruptcy Court for the Southern District of New York against its former subsidiary, Genesis Global Capital LLC, demanding over $105 million in repayment under a $1.1 billion promissory note issued in June 2022 [2]. The promissory note was intended to provide financial support to Genesis following the collapse of Three Arrows Capital (3AC) in 2022, which had caused significant losses after Genesis had extended $2.36 billion in loans to the failed firm. DCG now asserts that the note should be repaid, arguing that Genesis has benefited from over $2.8 billion in asset recoveries from 3AC collateral, which it claims has effectively offset the debt [2]. The company also highlights that the increasing value of crypto assets and collateral has further strengthened its position in seeking repayment.

Genesis, however, has pushed back, with legal representatives stating that DCG's claims contradict earlier agreements and court statements. Genesis notes that DCG has already received more than $100 million in distributions from 3AC-related asset recoveries, which it views as fulfillment of the promissory note’s terms [2]. The legal dispute reflects the complex financial and legal dynamics that often emerge between parent and subsidiary entities, particularly in the volatile crypto sector. The collapse of 3AC and FTX in 2022 triggered a cascade of liquidity crises, bankruptcies, and investor losses, with Genesis itself filing for Chapter 11 bankruptcy in January 2023. It later completed a restructuring in August 2024, distributing around $4 billion to creditors and stakeholders [2].

The current legal battle is also part of a larger conflict between DCG and Genesis. In 2025, Genesis filed a $3.1 billion lawsuit against DCG and its CEO Barry Silbert, alleging fraud and mismanagement before its bankruptcy. The ongoing litigation highlights the deep uncertainties and risks present in the crypto industry, especially concerning intercompany obligations and asset recovery strategies during periods of extreme market stress [2].

Market reactions to the lawsuit have remained relatively muted, with no significant volatility observed in major cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH). This reflects a broader trend of risk absorption by investors and institutions as the market continues to adjust to the aftermath of Genesis’s bankruptcy and the broader 2022 crypto downturn. The outcome of this case could influence future regulatory and legal approaches to bankruptcy claims and asset recovery within the crypto industry [2].

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[2] https://coincodecap.com/dcg-issues-lawsuit-against-genesis-over-1-1-billion-promissory-note-tied-to-3ac-collapse