Cryptocurrency firm Digital Currency Group (DCG) and its founder Barry Silbert have been sued after their subsidiary Genesis went bankrupt last week.
Cryptocurrency company faces class action lawsuit
Silver Golub & Teitell LLP (SGT) filed a securities suit in Connecticut District Court where DCG is located. The law firm said the complaint was aimed at holding DCG and Silbert accountable. They are also being sued for outright fraud, reiterating the Winklevoss twins’ complaint that they made false statements. The following statements were included in the court document:
The complaint also includes securities fraud through a scheme by Genesis Global to defraud prospective and current digital asset lenders by making false and misleading statements that deliberately misrepresent the financial position of Genesis Global Capital in violation of Section 10(b) of the Exchange Act. claims to work.
According to the complaint, the fraud scheme was carried out to encourage prospective crypto lending platforms to lend crypto assets to Genesis Global Capital and to prevent existing lenders from using their crypto assets. Alongside institutional clients, Genesis has processed billions of crypto-backed loans to numerous clients, including the now-bankrupt Three Arrow Capital (3AC) hedge fund.
Is Gemini part of the case?
They lost approximately $1.1 billion to 3AC, but DCG and Barry Silbert claimed they covered the loss through a $1.1 billion promissory note, allowing Genesis to continue operating for another five months. FTX’s bankruptcy resulted in another $150 million loss to Genesis; this, together with operations suspended in November, put companies in a big negative situation.
After that, it turned out that instead of actually covering 3AC’s losses, this bill had to be paid within ten years and there was a deficit of approximately $2 billion that led to Genesis’ bankruptcy. Close to $1 billion is owed to Gemini Earn, run by the Winklevoss twins. After being declared bankrupt, the Winklevoss twins threatened to sue DCG. It is unclear at this time whether they are part of this class action lawsuit.
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