Genesis creditors are suing Digital Currency Group (DCG) and its CEO Barry Silbert over alleged violations of federal securities laws, according to a Jan. 3 press release. 23.
The class action action seeks to hold DCG and Silbert liable as “controlling person(s)” pursuant to federal securities laws— DCG is the parent company of Genesis, which filed for bankruptcy last week.
The lawsuit was filed in the US District Court for the District Connecticut by creditors who lent their digital assets to Genesis between Feb. 3. 2, 2021 and November. 16, 2022.
The suit alleges that Genesis engaged in an offering of unregistered securities. Thus, Genesis violated securities law by executing lending agreements related to securities without qualifying for a registration exemption under the securities laws, according to the press release.
Furthermore, the complaint alleges that Genesis committed securities fraud by making false and misleading statements about its financial condition.
The law firm Silver Golub & Teitell LLP – which is representing Genesis creditors in the lawsuit – noted:
“The fraud scheme, according to the complaint, was implemented in order to induce potential digital asset lenders to lend digital assets to Genesis Global Capital and to prevent existing lenders from redeeming their digital assets.”
It’s not clear at this time if Gemini Earn users — who have the largest lawsuit against Genesis at $765.9 million — are part of a class action lawsuit.