DCG, Silbert Facing Securities Class Action Lawsuit from Genesis Creditors
• Digital Currency Group (DCG) and CEO Barry Silbert are facing a securities class action (SCA) lawsuit from a group of Genesis creditors.
• The lawsuit was filed by Silver Golub & Teitell (SGT), on behalf of those who entered into lending agreements involving digital assets with Genesis.
• 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.
Digital Currency Group (DCG) and its CEO Barry Silbert have been hit with a securities class action lawsuit, filed by the law firm Silver Golub & Teitell (SGT) on behalf of a group of Genesis creditors. The lawsuit is a result of Genesis’s alleged involvement in carrying out lending agreements involving securities without being exempt from registration as per federal securities laws, thus conducting an unregistered securities offering.
The lawsuit claims that Genesis Global Capital, a subsidiary of DCG, 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. This activity resulted in Genesis filing for chapter 11 bankruptcy on January 19th, with the company collecting $5.1 billion in liabilities before pausing withdrawals on its lending platforms due to its exposure to the FTX cat.
The class action lawsuit filed against DCG and Silbert is seeking damages for the claimed violation of securities laws, as well as an order from the court to prevent the defendants from continuing the alleged fraudulent activities. The plaintiffs are also requesting an order that would require DCG and Silbert to pay restitution to those affected by the alleged securities violations.
The lawsuit is the latest development in what has been a tumultuous few months for Genesis and its affiliates. In addition to the recent bankruptcy filing, the company has faced a string of controversies, including accusations of mismanagement, mishandled customer funds, and customer complaints. It remains to be seen how this lawsuit will affect the future of Genesis and DCG, but it certainly will not be the end of the saga.