Bankrupt Cryptocurrency Company Claims To Pay Its Debts! –

Digital Currency Group (DCG) subsidiary Genesis, which filed for Chapter 11 bankruptcy on Jan. 19, is facing a securities lawsuit by a group of creditors against DCG and its CEO Barry Silbert. But in an interesting development, the company claims that cryptocurrency swaps that took place in August and November paid off debts.

Genesis faces class action lawsuit

Bankrupt cryptocurrency company Genesis is facing more legal issues with a new class action lawsuit. A group of Genesis creditors filed a securities class action (SCA) lawsuit against DCG and its founder and CEO, Barry Silbert, alleging violations of federal securities laws.

The lawsuit was filed by Connecticut-based law firm Silver Golub & Teitell (SGT) on behalf of individuals and entities that have made loan agreements with Genesis. The law firm is known for handling major industry lawsuits, including a class action lawsuit filed against Coinbase in March 2022.

The new complaint against DCG and Silbert alleges that Genesis was involved in an unregistered securities offering in violation of securities laws by concluding lending agreements involving securities without qualifying for exemption from registration under federal securities laws. The lawsuit will also allege that Genesis engaged in securities fraud through a scheme to defraud potential and current customers by making false and misleading statements.

Customers of Gemini Earn, one of Genesis’ largest creditors, were shaken by the allegation that swaps in August and November of 2022 paid off debts. In an unexpected development, Genesis claims to have honored its obligations to Gemini by paying the proceeds of the private sale of Grayscale Bitcoin Trust (GBTC) shares that secured the debt.

Bankrupt crypto company claims to have paid off Gemini Earn debts

Gemini Earn was an interest-earning program run jointly by cryptocurrency exchange Gemini and Genesis. cryptocoin.comAs you follow, companies suspended the Earn program withdrawals for months after the FTX collapse. Genesis, which declared bankruptcy on January 19, owes approximately $1 billion to customers of this program. However, the company claims that the Grayscale Bitcoin Trust (GBTC) shares, which guarantee the debt, are closing this gap.

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On August 15, 2022, Genesis committed 30.9 million GBTC shares of Gemini Earn’s customers as collateral for the tokens. This arrangement was later extended on November 7, 2022. Meanwhile, FTX filed for bankruptcy on November 11, 2022, after weeks of prior bankruptcy rumors.

On November 16, 2022, Genesis froze withdrawals from its platform and reported that it made a net $284.3 million by selling collateralized GBTC shares to Gemini at $9.20 per share. However, with a debt balance of $769 million, the deficit totals $484.7 million. Given the “behind-the-scenes” agreement between the two parties, Genesis now claims that the $769 million balance owed to Gemini Earn customers was paid off by the GBTC share sale.

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