In a recent announcement on January 6th, the Digital Currency Group (DCG) has successfully fulfilled its commitment to pay off all short-term loans from its subsidiary, Genesis, which is currently undergoing bankruptcy proceedings.
Over the past year, DCG has demonstrated its financial strength by settling over $1 billion in debt to various creditors. A significant portion, approximately $700 million, was specifically directed towards Genesis, ensuring that all outstanding obligations were met.
CEO Barry Silbert’s Confirmation
Barry Silbert, the founder and CEO of Digital Currency Group, expressed his satisfaction with the accomplishment, stating, “I’m happy to share that @DCGco completed a full pay down of the money borrowed from Genesis. We have now repaid over $1 bn of debt, including this ~$700 mm, despite the headwinds faced by the industry. I’m excited about the industry’s next chapter and DCG’s leadership role in it.”
Genesis Bankruptcy Timeline
The firm filed for bankruptcy in January 2023 after suspending withdrawals in November 2022. Legal actions were initiated by the firm against its parent company, DCG, to recover an overdue loan amount exceeding $610 million. The total debt owed by DCG to various creditors was revealed to exceed $1.7 billion.
In November, a repayment deal was struck between the firm and DCG, with the parent company committing to pay $200 million. The remaining outstanding loan amount, as per the terms outlined in the plan approved by the federal bankruptcy court, must be settled with Genesis by April 2024.
Throughout the bankruptcy proceedings, DCG is obligated to maintain its current ownership structure in the trading firm, with a stake above 80%. This strategic decision ensures Genesis’s safeguard within DCG’s tax consolidated group, preserving the potential value of federal net operating loss carryforwards (NOLs) amounting to $700 million. This tax advantage allows Genesis to offset losses against future profits, securing long-term benefits.
