Genesis Capital received a class action lawsuit
2023.01.24 08:58
Genesis Capital received a class action lawsuit
By Tiffany Smith
Budrigannews.com – A new class-action lawsuit has been filed against Digital Currency Group (DCG), a troubled cryptocurrency company, and Genesis Capital, its subsidiary.
A securities class action (SCA) lawsuit was filed by Genesis creditors against DCG and Barry Silbert, the company’s founder and CEO, for alleged violations of federal securities laws.
Silver Golub & Teitell (SGT), a law firm based in Connecticut, filed the lawsuit on behalf of individuals and businesses that signed digital asset lending agreements with Genesis. A class-action lawsuit against Coinbase was filed in March 2022, and the law firm is well-known for handling major industry lawsuits.
By executing lending agreements involving securities without qualifying for an exemption from registration under the federal securities laws, the new complaint against DCG and Silbert alleges that Genesis engaged in an unregistered securities offering in violation of securities laws.
In addition, the lawsuit asserts that Genesis engaged in securities fraud through a plan to deceive both prospective and existing lenders of digital assets by making false and misleading statements. Plaintiffs claim that Genesis intentionally misrepresented Genesis’ financial situation, in violation of section 10(b) of the Securities Exchange Act of the United States.
According to the complaint, “the scheme to defraud was carried out in order to induce prospective digital asset lenders to loan digital assets to Genesis Global Capital and to prevent existing lenders from redeeming their digital assets,” SGT lawyers noted. “The scheme to defraud was carried out,” they added.
DCG is a cryptocurrency company based in Connecticut that was established in 2015. It is the parent company of Genesis, digital asset manager Grayscale Investments, crypto mining company Foundry, and cryptocurrency media outlet Coindesk. Silbert, the current CEO of DCG, is also chairman of the company’s board of directors and owns a controlling 40% equity stake.
After Genesis filed for bankruptcy on January 19, the news comes as the company prepares to hold its first bankruptcy hearings on January 23. Genesis stopped accepting withdrawals on November 16 because it was unable to fulfill redemption requests during the bearish cryptocurrency market. The bankruptcy filing came a few months later.
One of Genesis’ biggest creditors is Gemini, a crypto trading platform founded by the Winklevoss brothers. Genesis is said to owe $900 million to customers of Gemini. Cameron Winklevoss, co-founder of Gemini, announced on Jan. 20 via Twitter that the company had been preparing to take direct legal action against DCG, Silbert, and “others who share responsibility for the fraud.”
