DCG responds to Genesis bankruptcy; Bitcoin jumps 4% as contagion fears lessen
Only the lending arm of Genesis has filed for bankruptcy while DCG still has $526M in debt owed to Genesis by May 2023
Digital Currency Group, the parent company of both Genesis and Grayscale, released a statement on Jan. 20 commenting on the news that Genesis had filed for Chapter 11 bankruptcy.
Following the statement’s release, Bitcoin climbed above $21,000 to a year-to-date high of $21,912.
The fate of DCG has been assessed as a significant potential catalyst for further downside to the current crypto bear market. However, it appears that DCG’s statement has alleviated fears of an impending Bitcoin crash due to DCG potentially liquidating assets.
DCG confirmed that there is a clear separation between DCG and Genesis.
“Genesis has its own independent management team, legal counsel, and financial advisors, and appointed a special committee of independent directors, who are in charge of the Genesis Capital restructuring.”
Further, DCG decided to file for Chapter 11 on the appointed independent directors of Genesis while confirming that no DCG employees had any involvement in the decision.
In addition, assurance was given that DCG and its companies will “continue to operate business as usual.” These companies include Grayscale Investments, the trustee of the Grayscale Bitcoin Trust, and Genesis’s spot and derivatives trading businesses. Only the lending arm of Genesis has filed for bankruptcy at this time.
DCG confirmed the disclosure of a $526 million debt to Genesis Capital in May 2023, along with a $1.1 billion promissory note due in June 2032.
The statement contained a Q&A section that postulated that DCG had no obligation to take on the $1.1 billion promissory note owed to Genesis. The money was allegedly part of an unsecured loan to Three Arrows Capital (3AC). DCG took responsibility for the loan to support Genesis but never received any funds. 3AC collapsed during the Luna crash in May 2022, causing contagion across the industry.
$340 million was reportedly distributed throughout the Genesis group by DCG as additional support after the 3AC collapse.
DCG also answered a loaded question “What is DCG’s response to Gemini’s false accusations related to the Gemini Earn program and threat of a lawsuit?” Ignoring the apparent language bias, DCG again took the opportunity to describe the charges as “another publicity stunt from Cameron Winklevoss to deflect blame from himself and Gemini.”
The complete statement can be read below or via the dcgupdate.com website: