DCG Can't Sell or Reduce Ownership of Genesis Until Bankruptcy Proceedings Close, Judge Rules
Summary
Genesis, a bankrupt cryptocurrency lender, has successfully blocked its parent company, Digital Currency Group (DCG), from selling or reducing its stake in the firm until the completion of Chapter 11 proceedings. By preventing changes in ownership, Genesis hopes to secure tax benefits, which are only valid if it remains part of the tax-consolidated group led by DCG. If DCG's ownership of Genesis drops below 80%, the lender could lose benefits on around $700m worth of federal net operating loss carryforwards. These carryforwards, tied to the failure of crypto hedge fund Three Arrows Capital in 2022, could significantly decrease Genesis's federal income tax liability and bolster its future cash position.
