Digital Currency Group (DCG) has initiated legal proceedings against its subsidiary, Genesis Global Capital LLC, concerning a $1.1 billion promissory note issued in 2022. The lawsuit, filed in the U.S. Bankruptcy Court for the Southern District of New York, seeks to recover over $105 million plus interest.

The dispute stems from the collapse of crypto hedge fund Three Arrows Capital (3AC) in 2022, which had a significant impact on Genesis, one of 3AC's major lenders. When 3AC defaulted on a margin call, Genesis faced a $2.36 billion shortfall. To stabilize Genesis's balance sheet, DCG issued a $1.1 billion promissory note, effectively providing a financial backstop. DCG claims this was a voluntary contribution to cover a potential equity gap within Genesis Asia Pacific Pte. Ltd., an affiliate of Genesis.

DCG's lawsuit argues that Genesis has financially benefited from the situation. Following the market rebound, Genesis reportedly gained substantially from collateral recoveries related to 3AC, exceeding the original value of the promissory note. DCG contends that these gains, referred to as "TAC Recoveries," should have reduced the note's principal on a dollar-for-dollar basis. The company asserts that Genesis retained the surplus instead of repaying DCG, leading to the legal action to recover what it considers an overpayment.

According to DCG, Genesis "reap[ed] a massive windfall" rather than experiencing significant liquidity issues due to the 3AC default. DCG is seeking the return of payments made on the promissory note, arguing that Genesis is obligated to do so.

This legal battle is the latest in a series of disputes between DCG and Genesis. In May 2025, Genesis filed its own lawsuits against DCG, its affiliates, and CEO Barry Silbert, alleging fraud, insider enrichment, and concealed transfers. Genesis is seeking $3.3 billion, claiming DCG withdrew funds before Genesis declared bankruptcy. Genesis has accused DCG of fraud and mismanagement, including improper transfers exceeding $1 billion while the company was insolvent. They seek to recover over $3.1 billion related to note and asset transfers during the cryptocurrency market's financial turmoil.

Genesis filed for bankruptcy in 2023 following the broader crypto market downturn in 2022. The company has since completed a restructuring process, distributing approximately $4 billion in assets to creditors. However, as an equity holder, DCG is at the bottom of the repayment list.

The case highlights the complex financial relationships and obligations between parent companies and subsidiaries within the cryptocurrency industry, especially when emergency funding is provided during crises. The outcome of the lawsuits could set legal precedents for such situations.