Crypto Veteran Accuses DCG of Misleading Genesis Creditors
Digital Currency Group (DCG), led by Barry Silbert, recently announced the full repayment of the loan to its defunct subsidiary Genesis. However, a post on X by crypto veteran Vijay Boyapati presents a different narrative. The author of ‘The Bullish Case for Bitcoin’ alleged a pattern of deceit by DCG and Silbert.
Boyapati circled back to Genesis’ insolvency in June 2022, when CEO Michael Moro, alongside DCG and Silbert, reportedly funded Genesis to hide losses.
He claims that DCG supposedly accomplished this through a “promissory note,” which Genesis treated as a current asset, despite its decade-long redemption period and below-market interest rate.
Crypto vet alleges GBTC settlement
The thread also alleges that during this period, DCG withdrew a substantial loan of 18,697 Bitcoins from Genesis, knowing the latter was insolvent. Boyapati notes that it is this specific loan that DCG and Silbert recently claimed to have repaid.
Boyapati claims that during the FTX collapse in November 2022, DCG purportedly repaid part of its Bitcoin loan to Genesis. However, he claims that it was not paid in BTC but with discounted shares of GBTC. He hints at Genesis’ partial acceptance of the repayment despite the creditors’ claim on BTC.
Why is ETHE down?
DCG paid back its Bitcoin denominated loan in ETHE.
Except..I’m told the loans docs require paying back in Bitcoin.
There is no payment in kind.
DCG is forcing Genesis to eat the transaction costs (eg, the cost of converting ETHE).
You can’t pay a USD…
— Ram Ahluwalia CFA, Lumida (@ramahluwalia) January 8, 2024
“There was no easy way for Genesis to sell the GBTC and convert it to BTC because GBTC was a product of its sister-company, Grayscale, and regulations prevent the sale of more than a small % of the total fund per quarter for related companies,” Boyapati added.
Creditors reportedly reach court
Amid these allegations, reports have emerged that an ad hoc group of lenders has accused DCG of failing to meet its repayment obligations to Genesis Global. According to reports that cited the court filing on Monday, DCG still owes substantial amounts in both USD and BTC.
On Friday, DCG announced that it settled $1 billion in debts, including $700 million to Genesis, amidst bankruptcy proceedings.
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