Digital Currency Group (DCG) can’t make any ownership changes with Genesis until the former exits bankruptcy, a judge ruled on Monday, Blockworks.co reported. The ruling leaves Genesis protected under DCG’s tax consolidated group, giving certain benefits to the bankrupt institutional-focused crypto lender. Those benefits are in effect until the “occurrence of the effective date of a Chapter 11 plan” or the bankruptcy is converted to a chapter 7 case. Genesis filed the motion back in late November, arguing that DCG’s stake in Genesis must stay above 80% to “to protect the potential value of [its holding company’s] interest in the federal net operating loss [NOL] carryforwards of the DCG Group.” Net operating loss carryforwards are a tax benefit, allowing Genesis — or any eligible company — to deduct losses from future profits. Genesis is “estimated to have generated in excess of $700 million of NOLs in the course of [its] business,” which it could lose under ownership changes. The carryforwards, Genesis said, are “directly attributable to the failure by the digital asset hedge fund Three Arrows Capital” to repay loans given by Genesis Asia Pacific.
