Genesis Secures Court Order Preventing Parent Company DCG's Ownership Reduction

By: Eliza Bennet

The parent company of the bankrupt crypto lending firm Genesis, Digital Currency Group (DCG) has been prevented from selling or decreasing their stake in the distressed business until the completion of the bankruptcy process, a recent court filing revealed.

The decision taken by Judge Sean Lane emphasized the critical importance of DCG's share in Genesis for securing tax advantages. Maintaining Genesis's connectivity to DCG is indispensable for it to stay as part of a tax-consolidated group, as stipulated under Section 1502 of the Tax Code and associated regulations.

This progression intensifies the existing clash between Genesis and DCG. DCG pledged to repay its outstanding loan of $324.5 million by the end of April 2024 last November as part of its effort to resolve a potentially costly lawsuit involving $620 million due to Genesis.

In addition, Genesis contends that this reimbursement will lessen litigation expenses and provide funds to pay the creditor impacted by the insolvency process.