• Digital Currency Group (DCG) and its CEO Barry Silbert have been hit with a securities class action (SCA) lawsuit from a group of Genesis creditors.
• The lawsuit claims that Genesis broke securities laws by carrying out lending agreements involving securities without being exempt from registration as per federal securities laws.
• The company is currently undergoing its first bankruptcy proceedings following the filing of chapter 11 bankruptcy on Jan. 19th.
Digital Currency Group (DCG) and its CEO Barry Silbert have been hit with a securities class action (SCA) lawsuit from a group of Genesis creditors. Silver Golub & Teitell (SGT), a law firm based in Connecticut, filed the lawsuit on behalf of those who entered into lending agreements involving digital assets with Genesis. The lawsuit claims that Genesis violated federal securities laws by carrying out lending agreements involving securities without being exempt from registration.
The lawsuit also alleges that Genesis engaged in fraudulent securities activities by providing false or misleading information about the company’s financial status 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 is known for taking on major crypto industry lawsuits, such as the class action lawsuit filed against the popular digital asset exchange Coinbase back in March 2022.
The news of the lawsuit against DCG and Silbert comes as Genesis, a subsidiary of DCG, is undergoing its first bankruptcy proceedings following the filing of chapter 11 bankruptcy on Jan. 19th. The company had collected $5.1 billion in liabilities before pausing withdrawals on its lending platforms due to its exposure to the FTX catalyst.
The lawsuit against DCG and Silbert seeks to recover damages caused by their alleged unlawful activities. It remains to be seen how the proceedings will unfold, as this is one of the few class action lawsuits to be brought against a major digital asset industry player. It is also unclear whether the lawsuit will have any impact on the ongoing bankruptcy proceedings, or if a settlement can be reached outside of the court system.