DCG Sues Genesis for $105 Million Over $1.1 Billion Promissory Note

Digital Currency Group (DCG), a major venture capital firm in the cryptocurrency and blockchain industry, has filed a lawsuit against two of its former subsidiaries, Genesis Global Capital and Genesis Asia Pacific, in the U.S. Bankruptcy Court for the Southern District of New York. The suit seeks repayment of over $105 million in principal plus interest, based on a $1.1 billion promissory note issued in June 2022. The note was intended as a safeguard following the collapse of crypto hedge fund Three Arrows Capital (3AC), which had left Genesis with a significant equity shortfall due to a $2.36 billion default exposure [1].

According to the filing, DCG issued the promissory note to stabilize Genesis in the wake of the 3AC default. The firm alleged that rather than suffering losses, Genesis capitalized on the situation by using the collateral—shares in Grayscale’s Bitcoin Trust—that had appreciated in value as Bitcoin prices rebounded. The filing claims that Genesis profited "by nearly $2.8 billion" from the 3AC default and has retained the excess funds instead of repaying the overpayment [2].

This is the latest development in a long-standing legal dispute between DCG and Genesis. In May 2025, Genesis filed its own lawsuit against DCG, CEO Barry Silbert, and related entities, alleging fraud, insider enrichment, and concealed asset transfers that contributed to the collapse of the company. Genesis seeks to recover $3.1 billion in total [3].

The litigation raises key questions about the obligations of parent companies and subsidiaries during financial crises. DCG argues that its $1.1 billion note was a temporary financial intervention and should have been repaid as Genesis recovered value from 3AC-related collateral. The case also highlights the broader impact of the 2022 crypto market collapse, particularly the cascading effects of the 3AC and FTX bankruptcies. Despite having limited direct exposure to FTX, Genesis ultimately filed for bankruptcy in early 2023 due to a “run on the bank” following FTX’s collapse. The firm completed its restructuring in August 2024 and distributed approximately $4 billion in assets to creditors, though DCG remains at the bottom of the repayment queue [4].

DCG’s lawsuit underscores the complexity of financial interdependencies in the crypto industry, especially during periods of extreme volatility. The outcome could establish a precedent for how parent companies pursue repayment from subsidiaries in similar situations [5].

Sources:

[1] TheBlock - [https://www.theblock.co/post/367123/digital-currency-group-files-lawsuit-against-subsidiary-genesis-over-1-1-billion-promissory-note-amid-post-crash-fallout](https://www.theblock.co/post/367123/digital-currency-group-files-lawsuit-against-subsidiary-genesis-over-1-1-billion-promissory-note-amid-post-crash-fallout)

[2] Binance - [https://www.binance.com/en/square/post/28354345442930](https://www.binance.com/en/square/post/28354345442930)

[3] Blockonomi - [https://blockonomi.com/dcg-sues-genesis-over-1-1b-note-issued-after-three-arrows-collapse/](https://blockonomi.com/dcg-sues-genesis-over-1-1b-note-issued-after-three-arrows-collapse/)

[4] Benzinga - [https://www.benzinga.com/crypto/cryptocurrency/25/08/47162460/digital-currency-group-sues-genesis-over-1-1-billion-2022-bailout-amid-bankruptcy-dispute](https://www.benzinga.com/crypto/cryptocurrency/25/08/47162460/digital-currency-group-sues-genesis-over-1-1-billion-2022-bailout-amid-bankruptcy-dispute)

[5] Bitcoinsensus - [https://www.bitcoinsensus.com/news/business/dcg-filed-suit-against-genesis-1-1b-note-105m-due](https://www.bitcoinsensus.com/news/business/dcg-filed-suit-against-genesis-1-1b-note-105m-due)