DCG’s countersuit escalates a multi-billion-dollar legal battle over post-Three Arrows Capital collapse recoveries, with both firms pursuing overlapping claims in bankruptcy and fraud cases.
Digital Currency Group (DCG) has filed a countersuit against bankrupt subsidiary Genesis Global Capital, seeking cancellation of a $1.1 billion promissory note and recovery of $105 million in alleged overpayments plus interest. The dispute stems from a June 2022 agreement following Three Arrows Capital’s $2.36 billion loan default to Genesis. DCG argues that Genesis’s $2.8 billion recoveries from 3AC, largely through surging GBTC shares, should have reduced the note’s principal to zero under agreed terms. Despite this, DCG continued payments, which it now seeks to reclaim. Genesis is simultaneously suing DCG for over $3.1 billion, alleging fraudulent transfers, insider dealings, and misuse of the subsidiary’s assets. The legal wrangling follows Genesis’s January 2023 bankruptcy, SEC fines totaling $38.5 million against DCG and former Genesis CEO Michael Moro, and allegations that DCG used Genesis as a de facto treasury while ignoring early insolvency warnings.