TLDR
- DCG sues Genesis entities for overpayments made on a $1.1 billion note tied to 3AC’s default.
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The promissory note was issued in 2022 to cover potential losses from 3AC’s collapse.
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Genesis allegedly profited from 3AC’s collateral, despite DCG’s safeguard for potential losses.
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DCG seeks over $100 million in payments, following Genesis’ bankruptcy and restructuring.
Digital Currency Group (DCG), a major venture capital firm tied to the cryptocurrency industry, has filed a lawsuit against two of its subsidiaries. The complaint, submitted to the US Bankruptcy Court for the Southern District of New York, claims Genesis Global Capital and Genesis Asia Pacific owe DCG overpayments related to a $1.1 billion promissory note.
The note was issued in June 2022 to protect Genesis against any financial fallout from the default of Three Arrows Capital (3AC).
DCG alleges that Genesis profited by “hundreds of millions of dollars” without facing significant losses, despite 3AC’s default. The lawsuit is part of the ongoing legal issues between DCG and Genesis, which started with 3AC’s collapse in 2022. This latest action adds to the tension between the parent company and its subsidiaries, with both entities involved in disputes over finances.
Promissory Note Issuance and Its Purpose
The promissory note was issued as a safeguard for Genesis in case it faced a capital shortfall due to 3AC’s default. At the time, Genesis was exposed to 3AC, which had borrowed significant sums. According to DCG, Genesis was facing a potential gap in its equity, which led to the issuance of the $1.1 billion note.
However, DCG claims Genesis did not experience the liquidity crisis it anticipated. Instead, as cryptocurrency prices recovered, Genesis benefited from the collateral tied to 3AC’s loans, specifically shares of Grayscale’s Bitcoin Trust.
Digital Currency Group (DCG) filed a lawsuit against its subsidiary, Genesis Global Capital LLC, on August 14, 2025, in the U.S. Bankruptcy Court for the Southern District of New York. The dispute centers on a $1.1 billion promissory note DCG issued to Genesis in 2022 to address…
— MartyParty (@martypartymusic) August 15, 2025
The recovery of cryptocurrency prices enabled Genesis to utilize the collateral effectively. DCG argues that Genesis’ profit from the default of 3AC went far beyond what was required to cover any shortfall, leaving Genesis with a substantial financial gain. The lawsuit claims that this unexpected windfall means Genesis should return payments made on the promissory note to DCG.
Genesis’ Legal Battles Following 3AC’s Collapse
The legal entanglements between DCG and Genesis are part of a broader crisis triggered by the collapse of 3AC in 2022. Genesis itself filed for bankruptcy in January 2023, citing the effects of a “run on the bank” after the market turmoil caused by 3AC’s default and the subsequent collapse of FTX.
While Genesis’ exposure to FTX was minimal, the bankruptcy of the exchange contributed to widespread damage across the crypto market, which severely affected Genesis’ financial stability.
Following the bankruptcy, Genesis completed a restructuring plan in August 2024. As part of the plan, the company agreed to distribute approximately $4 billion in funds to affected parties. Despite the restructuring efforts, DCG is now seeking to recover more than $105 million from Genesis, plus interest, due to what it considers overpayments related to the promissory note.
